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Nuclear News - 4/14/2006
RANSAC Nuclear News, April 14, 2006
Compiled By: Roman Sehling


A.  Russia - Iran
    1. Russian Expert: Iran Needs 'Lot of Time' To Access Nuclear Weapons Technology, Interfax-AVN (4/13/2006)
    2. ...And Launched 164 Uranium Centrifuges, Aleksandr Yemelyanenkov, Rossiyskaya Gazeta (4/13/2006)
    3. Moscow Deflects Blow From Iran. Tehran Declared Itself Nuclear Power Early, Experts Believe, Artur Blinov, Andrey Terekhov, and Aleksandr Babakin, Nezavisimaya Gazeta (4/13/2006)
    4. Russia's Former Atomic Minister: Too Early To Say Iran Goes Nuclear , ITAR-TASS (4/13/2006)
    5. Dangerous Enrichment, Gazeta.ru (4/13/2006)
    6. Russian Experts: Iran at Initial Stage of Uranium Enrichment Technology, Interfax-AVN (4/12/2006)
    7. Russia Expert Iran Atom Russian Expert Blames US for Iranian Nuclear 'Crisis', Interfax (4/12/2006)
    8. Iran's nuclear announcement is pure PR move - Russian expert , RIA Novosti (4/12/2006)
B.  Russia - India
    1. India-Russia-China: Common Agenda, K. S. Manjunath and Rukmani Gupta , Institute of Peace and Conflict Studies (4/13/2006)
    2. Passage to India - Russia Looks to Meet India’s Growing Energy Needs, Shaun Walker, Russia Profile (4/11/2006)
    3. Russia ready to invest in nuclear sector: Kirienko, The Hindu (4/10/2006)
    4. Indo-Russian group to expedite commissioning of nuke plants, The Hindu (4/9/2006)
    5. Russian guided by security interests in LEU deliveries to India, RIA Novosti (4/8/2006)
C.  Nuclear Industry
    1. When will the U.S. lift restrictions on Russian uranium exports?, Pyotr Goncharov, RIA Novosti (4/14/2006)
    2. Kiriyenko Is Exploring Possibilities in Asia, Rossiyskaya Gazeta (4/13/2006)
    3. Nuclear Reactors Not To Be Built If Public Objects - Official , ITAR-TASS (4/13/2006)
    4. What the papers say: "American nuclear producers ask for Russian uranium", RIA Novosti (4/11/2006)
    5. Russia mulls uranium production abroad - official , RIA Novosti (4/10/2006)
    6. Russia Eager to Get Back to U.S. Uranium Market, Kommersant (4/10/2006)
D.  Nuclear Forces
    1. Designer announces changes in Russian nuclear missiles , Viktor Litovkin, RIA Novosti (4/14/2006)
    2. No Injuries in Russian Submarine Flash Fire , Interfax-AVN (4/13/2006)
    3. Northeast Russia Troops HQ Denies Information on Nuclear Submarine Blaze, ITAR-TASS (4/13/2006)
    4. Russian Expert Says New Liquid-Propellant ICBM Development Inexpedient, Interfax-AVN (4/13/2006)
    5. Russian Designer: Bulava Missile May Have Sea, Ground-Launched Versions, ITAR-TASS (4/13/2006)
    6. Expert: Russia To Have No Less Than 2,000 Nuclear Warheads By 2020 , Interfax-AVN (4/13/2006)
    7. Russian Expert: US Tactical Nukes in Europe Increase Terrorist Threats , Interfax-AVN (4/13/2006)
    8. Expert Says Russia Has Met Nuclear Arms Reduction Commitments, Interfax-AVN (4/13/2006)
    9. U.S. State Department: Russia Yet To Carry Out Nuclear Initiative Commitments, Interfax (4/12/2006)
    10. Russia: Academician on Likely Future Improvements in Submarines , Interfax-AVN (4/10/2006)
    11. A Nuclear Tempest in a Teapot: The Tendency Toward Operations Using Force - Is not yet Cause for Alarm, Pavel Semenovich Zolotarev, Nezavisimoye Voyennoye Obozreniye (4/8/2006)
    12. THE PENTAGON DENOUNCES: THE US DEPARTMENT OF DEFENSE CATEGORICALLY DISAGREES WITH THE ARTICLE ON AMERICAN NUCLEAR STRATEGY PUBLISHED BY FOREIGN AFFAIRS, Sergei Grinayev, Defense and Security/Krasnaya Zvezda
E.  Chemical Weapons Destruction
    1. U.S. missing chemical treaty deadline, United Press International (4/14/2006)
    2. International Inspectors Reported That the Storage Conditions of Chemical Weapons at the Maradykovskiy Facility Meet Standard Requirements, RIA Novosti (4/13/2006)
F.  Submarine Dismantlement
    1. Norway releases funding for AMEC sub transportation in a victory for Bellona , Charles Digges, Bellona Foundation (4/12/2006)
G.  Scientist Redirection
    1. ISTC approves four projects in Kazakhstan, newKerala.com (4/13/2006)
    2. Press Release, International Science and Technology Center (4/5/2006)
H.  Nuclear Security
    1. Ivanov Warns of 1,152 Firms, Nabi Abdullaev, The Moscow Times (4/12/2006)
    2. Chernyobyl-like slovenliness today: RTGs are being vandalized near Norilsk, Rashid Alimov and Vera Ponomareva, Bellona Foundation (4/12/2006)
    3. Ukrainian Deputy: 250 Nuclear Warheads Lost 'on Paper' During Transfer to Russia , FOCUS News Agency (4/10/2006)
    4. Russia: Canada To Contribute to Dismantling of Nuclear Electric Power Generators, Interfax-AVN (4/10/2006)
I.  Cooperative Threat Reduction
    1. U.S. strategic arsenal to be cut by 80% by 2012 - official, Interfax (4/12/2006)
    2. U.S. hopes for extension of threat reduction program with Russia, Interfax (4/12/2006)
    3. U.S.-Russian war center still stalled, ERIC ROSENBERG, Hearst News Service (4/9/2006)
J.  Comprehensive Test Ban Treaty
    1. Russian Deputy Proposes Revising Nuclear Test Moratorium, Interfax-AVN (4/12/2006)
K.  Official Statements
    1. PRESS CONFERENCE WITH STEPHEN RADEMAKER, ACTING ASSISTANT SECRETARY OF STATE FOR SECURITY AND NONPROLIFERATION ISSUES, Official Kremlin International News Broadcast (4/12/2006)
    2. Democrats' Radio Response , Fox News (4/8/2006)
    3. HEARING OF THE ENERGY AND WATER SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE APPROPRIATIONS FOR THE NATIONAL NUCLEAR SECURITY ADMINISTRATION, Federal News Service (4/6/2006)
    4. Countering WMD and Terrorism Through Security Cooperation , Stephen G. Rademaker, Federal News Service (4/6/2006)
    5. U.S. REPRESENTATIVE DAVID HOBSON (R-OH) HOLDS A HEARING ON FISCAL YEAR 2007 APPROPRIATIONS FOR ENERGY SUPPLY, CONSERVATION, AND FOSSIL ENERGY PROGRAM, Federal News Service (4/5/2006)



A.  Russia - Iran

1.
...And Launched 164 Uranium Centrifuges
Aleksandr Yemelyanenkov
Rossiyskaya Gazeta
4/13/2006
(for personal use only)


In the growing conflict surrounding the Iranian nuclear program, the Russian side has the most unenviable mission: "To answer for the open door," as a high-level source in the Federal Atomic Energy Agency put it. But even the most patient negotiator's patience may run out.

The latest prominent announcements by the Iranian leadership about joining "the number of countries possessing nuclear technologies," despite all allowances for the propagandistic nature of such declarations, effectively put an end to what to many had seemed to be the recent fruitful negotiations about creating a Russian-Iranian joint venture for uranium enrichment on Russian territory. The "specially prepared shops," which Rosatom (Federal Atomic Energy Agency) Director Sergey Kiriyenko had repeatedly mentioned, referring to the well-known combine in Angarsk, have not seen any lucrative contracts with Teheran. And judging by all, they never will.

His colleague at the negotiations, the head of the Atomic Energy Organization of the Islamic Republic of Iran Golyamrez Agazade, announced that his country's scientists and specialists have independently succeeded in enriching uranium to those conditions that are required for production of fuel for an AES (nuclear power plant). And the President of Iran called upon his scientists to step up their efforts in the scope of the nuclear program--so as to organize enrichment on an industrial scale within the shortest possible time, "and to create a full nuclear cycle in the country." It was specifically with this goal in mind that production facilities are being built at an accelerated rate on the territory of the Natanz nuclear center.

"I am asking all responsible officials to step up their work on production of fuel for AES," said M. Ahmadinejad, speaking on state television. And, in doing so, he refuted the reproaches and suspicions about a military directionality of these aspirations.

The danger of the situation lies in the fact that, if Iran develops and launches uranium enrichment to energy conditions on an industrial scale, then nothing will keep it from producing high enrichment uranium on these same installations for the purpose of developing a nuclear weapon (if it so desires). "They just need to turn it longer," sources at the Urals Electrochemical Combine, where these technologies have been perfected, explained to our correspondent.

Moreover, the dependence here is not linear, the ex-head of Rosatom (Federal Atomic Energy Agency), RAN (Russian Academy of Sciences) Academician Aleksandr Rumyantsev invariably emphasizes. In his words, it is most difficult at the initial stage, as it is necessary to deal with large volumes of raw material and shipments, which are always difficult to conceal. But then, when there is already uranium with enrichment level of 3-3.5 percent, all of the subsequent technological processes are localized. They may be performed in comparatively small shops, including deep underground. And finding such unannounced activity by long-range control methods would be very difficult.

Therefore, one question has been and remains paramount: Specifically what nuclear club does Iran intend to join? The one to which many states belong--the members of the IAEA, who are developing nuclear energy and a specific fuel cycle in their countries? Or the one that India and Pakistan joined, in fact without an invitation, by creating their own nuclear weapon parallel with the development of nuclear energy?

(Correspondent) At the institute that you head up, everyone knows about centrifuges and uranium enrichment. How do you appraise the latest announcements by the Iranian leadership?

(Valentin Shatalov) There is nothing sensational about them. They are simply talking about the completed stage of scientific-research and experimental design work.

(Correspondent) Can you express any suppositions about where Iran got the equipment for enriching uranium on gas centrifuges? After all, the export of such technologies is strictly controlled.

(Shatalov) It is hard to say. But, in any case, I do not see anything Russian there. We must remember that the scientists and specialists from Iran studied and underwent in-service training in France, in the USA, and in other countries. I would not discount their sufficient level of information on these questions. They have doctors and sciences, and their own professorial staff...

(Correspondent) The Iranian authorities have announced that they are using only an experimental cascade comprised of 164 centrifuges, which allows them to obtain only low enrichment uranium for the needs of the nuclear power industry. But what number of centrifuges must we be talking about in order to obtain fissionable weapons-grade material--with enrichment within the limits of 90 percent by uranium-235 isotope?

(Shatalov) At least 1,000 centrifuges.

(Correspondent) In that case, what allowed the Iranian authorities announce their "membership in the nuclear club?"

(Shatalov) Evidently the fact that they have all of the capacities to develop nuclear energy in their own country, without any outside assistance. They had announced this even before.


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2.
Dangerous Enrichment
Gazeta.ru
4/13/2006
(for personal use only)


Despite great doubts about their veracity, Iran's high-profile announcements about its successful enrichment of uranium, and even its mastery of thermonuclear synthesis, transform Russia's foreign policy mission in this country into the main task of domestic diplomacy in the world arena. Moreover, due to the specific nature of our counteragent (Iran is one of the most extremist Islamic states of the world, which demonstrates a constant inability to come to agreement either with the West, or with international organizations), global security in this mission is more important than Russian commercial interests and our geopolitical rivalry with the USA.

Specific enrichment of uranium in Iran up to 3.5 percent evokes no concern among Russian nuclear specialists. "Any enrichment of uranium under 20 percent is not prohibited by IAEA (International Atomic Energy Agency) rules, and is used for obtaining fuel for AES (nuclear power plants), and not for military purposes," the former head of Minatom (Ministry of Atomic Energy) and head of the Rosatom (Federal Atomic Energy Agency) Institute of Strategic Stability Viktor Mikhaylov said today. Most likely, he explained, having announced their success in enriching uranium to 3.5 percent, the Iranian authorities were announcing that "they want to talk as equals with the nuclear powers, and that they want to provide their nuclear specialists access to technologies for industrial enrichment of uranium and the full nuclear cycle for fuel production for their AES." In the ex-minister's opinion, "in the nearest time, the Iranian authorities will accept Russia's offer to create a joint enterprise for uranium enrichment on the territory of Russia."

Having lost the role of a super-power after the disintegration of the USSR, in recent years Russia has stubbornly been trying to regain its place as an important country in the world geopolitical arrangement, placing the stake on its role as a sort of mediator between the West and the social outcast countries with authoritarian or even totalitarian regimes. For some time, Russia had tried to use its connections with the regime of Saddam Hussein to prevent the incursion of the anti-terrorist coalition into Iraq. Having lost the battle for Ukraine, Moscow continued to actively support the Lukashenka regime in Belarus, even despite the poor personal relations of the Russian and Belarusian presidents. After the break of Uzbekistan from the Americans over last year's bloody suppression of opposition demonstrations in Andijan by the authorities, Russia immediately concluded an alliance agreement with this outcast country as well. Finally, Russia is tied with Iran--which has been in irreconcilable conflict with the Western world for almost 30 years now, ever since the moment of the victory of the Islamic revolution in the country in 1979 and the taking of hostages in the American embassy in Teheran--not so much by geopolitical, as by strictly commercial interests. Moreover, they are specifically in the sphere of nuclear energy.

It is specifically Russia that received the contract for construction of the AES in Bushehr, for which, according to the official version of the Iranian authorities, that country's nuclear program is being developed.

However, with the victory of the extreme Islamic radical, Teheran Mayor Mahmud Ahmadi-nejad, in the Iran presidential elections last year, the situation surrounding that country's nuclear program heated up to the limit. Ahmadi-nejad publicly threatens development of a nuclear bomb and readiness to use it against Israel. At the same time, Iran is refusing full-fledged cooperation with the IAEA, not allowing that organization's inspectors onto all of its nuclear facilities.

The Russian authorities, not wanting to give up their commercial interests, spent many months trying to block the transfer of Iran's nuclear dossier to the UN Security Council for the purpose of introducing harsh sanctions against that country. However, in this case, the undoubted economic interests of Moscow (despite the fact that the West also has similar interests, considering the serious oil reserves in Iran) should not serve as a hindrance to coordinated work of Russia and that same USA in bridling Teheran's nuclear ambitions.

Russia has asked Iran to create a joint venture on enrichment of uranium on Russian territory. Iran, despite its statements about the peaceful nature of its nuclear program, is still not agreeing to such a variant, because then its nuclear developments would automatically fall under the system of international control. Therefore, Russia, wanting to shield Iran from the threat of sanctions or even attempts at a forceful resolution of the Iranian nuclear problem on the part of the USA, is assuming extremely great political responsibility of world scale. If, in doing so, Moscow wants to regain the status of a capital, where political questions of world significance are resolved, it must prove that the Iranian authorities really do listen to the words of Russian diplomats.

As yet, there is no such proof. Iran is leading Russia on in just the same way as it has done both to the United States, and to the entire world community.

Considering the extreme radicalism of the Iranian authorities, we should evidently not use Iran as an arena for political rivalry with the Western world. This is not some African banana republic to which, by forgiving a few billion dollars in foreign debt, we then sell arms for a billion and pride ourselves on our commercial prowess. Present-day Iran, with its nuclear ambitions, is one of the main threats to security in the entire world. Therefore, coming to agreement with Teheran--either about total cessation of the nuclear program, or about its placement under strict international control--is more important for Russia in the strategic plane, than getting a big contract from the hands of people who are declaring their readiness to use nuclear weapons against the "infidels." If only because, from the standpoint of Iran's official political and religious doctrine, Russia represents the same hostile "Western world" as the USA or Great Britain. If only because (and we should also not forget this) one of the most important reasons for introducing Soviet troops into Afghanistan was the Ayatollah Khomeini's desire to create an Islamic state with inclusion of the Central Asian republics of the former USSR.

The quality of Russia's policy in regard to Iran will be determined not by the sum written into commercial contracts, but by the removal of another global threat to international security.

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3.
Moscow Deflects Blow From Iran. Tehran Declared Itself Nuclear Power Early, Experts Believe
Artur Blinov, Andrey Terekhov, and Aleksandr Babakin
Nezavisimaya Gazeta
4/13/2006
(for personal use only)


Excerpted:

[Sic] was expected in Tehran yesterday. On the eve of his arrival the Iranian leadership declared that Iran had joined the nuclear club. This report was being commented on in all leading capitals yesterday. Washington and Israel displayed the greatest concern. At first Moscow rebuked Tehran for "moving in the wrong direction" but then it once again mentioned the impossibility of a strong-arm solution to the Iranian problem. (Passage omitted)

The Rosatom (Federal Atomic Energy Agency) Press Service declared yesterday that this department's official position regarding the Iranian leader's statements has not been formulated. A high-ranking Rosatom staffer, who asked not to be named, emphasized in conversation with 's correspondent: "I see nothing sensational in these statements. It is most likely a question of laboratory experiments with uranium enrichment. There is nothing difficult about obtaining a microquantity of enriched uranium. All these experiments are under IAEA control. But Iran is still very, very far from a genuine nuclear fuel cycle." (Passage omitted)

There is no need to change anything at present in Russia's military strategy toward Iran. The Iranians have operational-tactical missiles which can be equipped with nuclear weapons. However, this direction of possible missile danger to Russia is reliably covered by the missile attack early warning system radar at Qabala in Azerbaijan. In addition, a factory-ready missile attack early warning system radar is being created in the south of Russia. So Iranian nuclear operational-tactical missiles will be detected in good time. They will be shot down by S-300PMU2 surface-to-air missile systems and the improved S-400's, which even now form the basis of Russia's missile and space defenses. Russia's military-political leadership has time to make the appropriate decision.

In addition, Russia has to operate within the framework of the international dialogue between the Eurotroika and Iran. The United States and China must also join this process. Incidentally, precisely China did a very great deal to help Iran to obtain nuclear technologies and infrastructure. But Russia cooperates with Iran only in constructing the peaceful nuclear electric power station at Bushehr.

At present Iran is using pilot plants, which utilize 160 centrifuges, to enrich uranium. This is very little to obtain weapons-grade uranium. To produce highly enriched uranium, a bank of centrifuges must consist of several thousand units. Admittedly, Iran did construct such a plant earlier. There are something like 50,000 centrifuges for this in warehouses. But the Iranians halted construction because of international obligations. It was resumed in February this year. In the long term, if the Iranians launch production, they may create a nuclear weapon based on highly enriched uranium in two or three years' time. But Iran does not have the appropriate equipment to produce weapons-grade plutonium.

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4.
Russia's Former Atomic Minister: Too Early To Say Iran Goes Nuclear
ITAR-TASS
4/13/2006
(for personal use only)


It is too early to say Iran has joined the club of nuclear powers, because many
other non-nuclear countries have the uranium enrichment capability, Russia's
former atomic energy minister, director of the Strategic Stability Institute under
the federal atomic energy agency Rosatom, Viktor Mikhailov, has told Itar-Tass.

"True, possession of this technology enhances the prestige of the nation
that has it. This is Iran's indisputable technological achievement. They are
bright guys. But it has no bearing whatsoever on nuclear arms production,"
Mikhailov said. "The more so, since the point at issue is the production of
low-enriched uranium."

"That was experimental enrichment of several grams of uranium. Saying that
Iran has created the full nuclear cycle is too early," Mikhailov said. "Any
enrichment of uranium under the 20-percent level is not prohibited by the IAEA
rules and is used in making fuel for nuclear power plants, not for military
purposes."

Mikhailov believes that "Iranian nuclear scientists are still unable to make
fuel for nuclear power reactors, nor can they create a nuclear warhead."
To create the full cycle for the production of one's own fuel at least to
load a nuclear power reactor only once "there are to be not one and a half
hundred centrifuges, but a thousand times more."

"There are to be the proper technologies and a very costly set of
equipment," Russia's former atomic energy minister said.

It is very likely that by declaring their successful enrichment of uranium
to a level of 3.5 percent the Iranian authorities in realty expressed the wish
"they want to talk to the nuclear powers as equals and want Iranian nuclear
scientists to have access to industrial uranium enrichment technologies and the
full nuclear cycle to make fuel for their power plant on their own."

At the same time Rosatom specialists have recalled that once a country has
mastered the uranium enrichment technology in principle, it is five years away
from the creation of a nuclear warhead.

All IAEA reports point to this risk.

In the meantime, Iran has repeatedly stated its nuclear research is purely
civilian.



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5.
Russian Expert: Iran Needs 'Lot of Time' To Access Nuclear Weapons Technology
Interfax-AVN
4/13/2006
(for personal use only)


Iran will be unable to increase its uranium enrichment capability to the amount
needed to make nuclear weapons in a short time, Deputy Director of the
Russian Academy of Sciences' Institute of Safe Atomic Power Engineering
Development Igor Linge told Interfax on Thursday.

"Even a sufficient amount of enriched uranium does not mean possession of
nuclear weapons. Raw materials are different from finished products," he said.
It will take a lot of time to get access to nuclear weapon technologies,
Linge said.

He generally agreed with the U.S. Department of State's opinion about the
time when Iran may produce enriched uranium, but disagreed on the possible time
it would take for Iran to build a bomb.

Iran will have enough enriched uranium for making a bomb in 271 days if it
gets 3,000 centrifuges, U.S. Assistant Secretary of State for International
Security and Nonproliferation Stephen Rademaker said on Wednesday.

But if Iran fully uses the Natanz facility and installs 50,000 centrifuges
there, they will make enough enriched uranium for a bomb within 16 days, he
said.

"It is unrealistic to make or purchase 3,000 or 50,000 centrifuges within a
short period," Linge said.

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6.
Iran's nuclear announcement is pure PR move - Russian expert
RIA Novosti
4/12/2006
(for personal use only)


Iran's announcement that it has joined the world's nuclear club is a bluff and a political PR move, an expert at a Russian think tank said Wednesday.

"The announcement that Iran can produce nuclear fuel is largely a bluff," said Vladimir Yevseyev, a senior researcher at the Moscow-based Center for Global Security. "What they [Iranian leaders] said about successfully completing the full nuclear cycle in laboratory conditions should not be viewed as a confirmation that the country could launch full-scale production of nuclear fuel."

In a televised speech on Tuesday, Iran's President Mahmoud Ahmadinejad said: "I officially announce that Iran has joined the group countries with nuclear technology."

The Russian expert said that during the latest experiment Iran had managed to produce only a small amount of low-enriched uranium.

"Iran is talking about completing a full nuclear cycle, but actually it has not gone that far because the full cycle includes plutonium separation in addition to uranium enrichment, and the country has made only a few initial steps in this sphere," Yevseyev said, adding that it could take Iran at least three years to accumulate enough high-enriched uranium to create a nuclear weapon.

The expert also said Iran could not be considered a member of the world's nuclear club because the country had not yet conducted a single nuclear test.

"Therefore, I regard all such statements merely as a bluff - political PR moves designed to apply pressure on the West, and ensure a better negotiating position," he said.

Meanwhile, the head of the international affairs committee of the upper house of the Russian parliament, Mikhail Margelov, said he believed Iran would continue its nuclear research.

He said the Iranian president's announcement that the country had produced enriched uranium made this intention clear.

"Tehran has made us understand the firmness of its position, and its readiness to continue nuclear developments - all this will only complicate further talks," he told journalists.

Margelov added, however, that uranium produced by Iran "does not present any direct military threat."

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7.
Russia Expert Iran Atom Russian Expert Blames US for Iranian Nuclear 'Crisis'
Interfax
4/12/2006
(for personal use only)


The Iranian leadership's statement that Iran has joined the group of countries
which have nuclear technology indicates that it is prepared to go into a deep
conflict with the international community, said Political Research Institute
Director Sergei Markov.

"In fact, this statement overturns the results of all previous talks with
the world community and points to Iran's preparedness to go into a conflict of
any depth," Markov told Interfax on Tuesday evening.

The Russian expert described the statement as harsh, but said that it does
not mean Iran actually possess nuclear weapons. This only indicates that Iran
has "its uranium enrichment cycle," he said.

Markov also said that the crisis over the Iranian nuclear problem, sparked
anew, is rooted in "an absolute inconsistency of the United States' policies."
"The crisis suggests that the United States' power has failed to evolve into
a leadership capable of uniting the largest countries in an effort to solve
global problems," the Russian political scientist said. The U.S. has made a
series of bad mistakes, including its argument with Russia over the post-Soviet
space, with Europe over Iraq, and with China," he said.

Markov said he doubts it would be possible to alleviate the crisis over the
Iranian nuclear program in the near future.

"Since the world community will not be able to shape any pertinent policy -
the U.S. has been the obstacle - the crisis, by all accounts, will linger on,
culminating in the emergence of one more nuclear power, then another one, and
then more in a chain reaction ," said Markov.

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8.
Russian Experts: Iran at Initial Stage of Uranium Enrichment Technology
Interfax-AVN
4/12/2006
(for personal use only)


It will take Teheran at least two to three years to develop nuclear weapons, given its laboratory uranium enrichment technology, Colonel General Viktor Yesin, ex-chief of staff of the Russian Strategic Missile Forces, told Interfax-Military News Agency on Wednesday.

"It will take Teheran at least two to three years to develop nuclear weapons. It is impossible both technically, and technologically to reach the objective earlier," Yesin said, commenting on Iran's statement that it had enriched uranium in laboratory conditions.

He said it takes large-scale uranium enrichment to build nuclear weapons.

"According to the IAEA, Iran operates about 160 uranium enrichment centrifuges in Natanz, but it takes 50,000 such centrifuges to enrich uranium on a large scale," Yesin said.

The IAEA is aware that Iran has mastered centrifuges production, he noted. "However, they have to be assembled, started, and tested, which may take years to do," he said.

According to Yesin, the fact that Iran has enriched uranium in laboratory conditions does not breach the NPT Treaty. "It is not banned, and any state is entitled to enrich uranium to be used for peaceful purposes as long as it complies with IAEA agreements," he said.

He pointed out that the problem was that Teheran had kept the IAEA in the dark with regards to its nuclear program for a long time.

"Such secretiveness leads one to believe that the Iranian program was aimed at developing nuclear weapons," Yesin said.

At the same time he thinks that the use of force is unacceptable for solving the Iranian nuclear problem. "It would be better to use IAEA inspectors to pressure Iran into ratifying an additional protocol to the IAEA agreement, which will allow the Iranian nuclear program to be put under control," Yesin said.

Alexander Khramchikhin, head of a department in the Institute for Political and Military Analysis, told Interfax-AVN that Iran had unleashed an informational war in response to pressure.

"It is a response war of nerves on the part of Iran. It may result in a backlash, when Teheran will not be trusted," Khramchikhin said, commenting on the recent statements of Iranian authorities on testing new missiles, torpedoes, and aircraft.

According to him, it was difficult to predict a possible U.S. response to Teheran's claims. "I believe that the U.S. realizes quite well that Teheran is only bluffing. It is next to impossible to win an informational war against the U.S.," Khramchikhin said.

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B.  Russia - India

1.
India-Russia-China: Common Agenda
K. S. Manjunath and Rukmani Gupta
Institute of Peace and Conflict Studies
4/13/2006
(for personal use only)


The China-Russia-India triangular relationship idea may be traced to Gorbachev's Vladivostok speech in 1986. He spelt out then the framework of USSR's relationship with Asia and, in particular with India and China. The end of the Cold War, Russia's transition into a democracy in the 1990s, Sino-Japanese tensions, the rise of China, and finally the resurgence of India will outline a new era of relationship between these three countries.

The China-Russia-India relationship issue has been overblown out of proportion ever since it cropped up as an idea in 1999. The so-called "triangle" has been very disappointing so far. This fact needs to be recognized. The main message of this presentation being that this 'legendary triangle' needs a strong infusion of business commonsense. The word "strategic," which has many meanings, is used less frequently these days while defining a Russia-China-India relationship. It is also another matter that all three sides are accusing one another of dragging their feet for the lethargic pace at which this relationship is evolving.

Former Russian PM, Yevgeny Primakov, had proposed a Russia-China-India strategic triangle in 1999. The war in Kosovo, in the heart of Europe, had rattled the continent and Primakov was acting as a diplomatic combatant in defending Russian interests. He floated this idea in this backdrop. He clearly had an anti-US intention for formulating this Russia-China-India alliance idea. But, of course he was bluffing. None of these countries will antagonize the US to provide a fillip to this relationship. Maintaining their respective relationship with the US is top priority for all three countries.

What happens between Russia-China-India is a matter of deliberations on issues like Central Asia, trade and business opportunities, etc. The relationship must be tailored along the lines of India's relationship with Brazil and South Africa, where there are regular consultations between the respective foreign ministers. But, it is not a strategic relationship.

It has been mooted that India is the driving force behind the Russia-China-India triangle, and is at the forefront of the talks that are held regularly. The first meeting was held at the UN, and the second meeting at Vladivostok in May 2005. Both were supposed to be Indian initiatives. There is a perception in Moscow and Beijing that New Delhi is to blame for the slow pace at which this relationship is blossoming. Nevertheless, there have been regular meetings of trade officials and diplomats. There are no official pacts apart from verbal agreements between diplomats i.e. diplomats informing each other about their positions on a number of issues. The items on the agenda for the three countries are:

Iran is at present being discussed between the respective foreign ministers and all countries are being very careful as to the positions they adopt. None of the countries are willing to take a stance that completely supports Iran, as it is proving to be an obstinate actor.

Global security issues in specific areas like terrorism and security in Central Asia are areas of convergence for the three countries, and they are satisfied with their coordination in this regard.

In the last meeting at Vladivostok, Russia proposed setting up a joint-disaster management mechanism. The Asian tsunami had just preceded this event and the need for better coordination in disaster management was the need of the hour. The Russians had earlier proposed this idea on several other fora like ASEAN, APEC, etc. as it was interested to sell disaster management-specific technology, in which it is a specialist. This proposal has been met with an eager response and the matter is still under negotiation.

The clarity in the relationship reduces or gets muddled when the main problem is sought to be tackled, and that is economic issues. Although a number of initiatives are under way in bilateral networks between the countries, but a viable platform for all three countries for business has to be approached with renewed vigour by the concerned diplomats. The issue becomes tricky when one looks at geoategic issues. Carving Russia's "oil cake" is one such issue. Here, India and China are competitors. Coordination for pipeline routes is also a subject for further discussions. From Russia's point of view, it is profitable to keep hold bilateral talks in this regard as it can secure a better price for its products.

The idea of joint-investment projects is a highly politicised issue and is known to have a dubious track record. This trilateral relationship will need some business acumen and less of politics. A firm economic and business foundation has to be laid. Hence, the main idea at Vladivostok was to set up a business council, which would then decide the further course of action. The underlying logic being that the businesspeople will boost economic cooperation and will provide valuable inputs to the respective foreign ministries over its implementation.

The Indians have been faulted for having missed an opportunity to host Russian and Chinese delegations early this year. Apart from the inherent suspicion displayed by Russia and China, Russia claims that it is not sure about India's positions on subjects like the setting up of disaster management units. Suspicions about India's commitment to deeper engagement were amplified in the wake of US President George W Bush's visit to India in March. Russian suspicion was much more subdued than that of China. While India might have kept the Russian government in the loop about the Indo-US nuclear deal, it is however, not reflected in the Russian media and intelligentsia. India has to allay Russian and Chinese fears that it has compromised its "independent foreign policy."

Returning to the topic of the aborted meeting between Russian, Chinese, and Indian businesspersons, the Indian government is to blame for not arranging the meeting in March. Although it is now slated to be held in April, it is still low priority for India as all its energies are focussed on the Indo-US N-deal.

In Moscow, a group of Russian businesspersons are arranging a meeting with their Indian counterparts. Unlike the diplomats, this group thinks that getting the cream of businesspersons is not a good idea until a working bottom-up framework is developed to facilitate businesses to chart unknown areas in other countries as well as in Central Asia. This Russia-India trade council was formed in February 2006 and is still a fledgling entity that will mature by the time Putin visits India this year. This trade council helped the Russian foreign ministry to reject the first draft of Indian proposals, which was "colonial" in nature. That is, it was a case of wrong thinking where the main idea hinged around Russian oil exports, and cheap Chinese labour and products. This model is against Russia's long-term economic strategy. Russia is not content with the status of a "second Saudi Arabia." Although Russia takes its position of being a major oil supplier in a serious manner, yet, Russia wants to base its future economy in trade of high-tech goods, services, and industrial development. Russia seeks high-tech and research based ventures.

India has drafted a second set of proposals, which made China suspicious as it saw this development as a result of deeper India-Russia engagement. China basically interpreted Russian designs as efforts to set-up Russian manufacturing facilities in India and China. They were, however, interested in the possibility in a joint-venture to manufacture a cargo plane. This venture can be profitable to all the parties involved. Ideas about energy delivery can also be discussed at the government level.

However, the Russia-India Business Council is wary of drawing up too many proposals as they will not take off the ground due to inevitable delays in the subsequent discussions between the concerned parties. Therefore, the Russian idea is that the first meeting must be low-key effort to establish institutional mechanisms. There are Chinese ideas of engaging with the SCO for greater engagement in Central Asia. This idea may bear fruit in April or July.

Some issues that emerged during discussion are summarised below. These comments are from the participants as well as Mr Kosyrev.

Nuclear Deal: Premier Wen Jiabao has remarked that China has reconciled itself to the Indo-US Nuclear deal. The question of Russia remains. Though Russia has supplied fuel to Tarapur, it is perceived that this move is against the wishes of its people. The reasons for apprehensions over the nuclear deal must be clearly examined. Suspicions arise mainly from a fear of what may lie beneath the deal. American policy around the Russian neighbourhood has been aimed at reducing Russian influence in the region. Also, India's vote on the Iran issue is seen as having been influenced by the deal. However, one must realise that India has always stood alone on nuclear issues. The Iran vote should be seen as largely independent of the deal with the US. Also, the deal reflects a strategic partnership and is not an alliance, and this needs to be understood clearly.

It is also important to remember that when one speaks of misunderstanding or wariness about the nuclear deal in Russia, the reference is not to the government but the mid-level public. While the inter-governmental communication is excellent, there is a need to educate and win over public opinion in Russia.

Trilateral Cooperation: When Primakov enunciated a trilateral relationship it was more a throwback to the old days rather than the clear enunciation of a policy. It was also in response to a reporter's question and was not part of a prepared speech. India's position today is one where its power and influence is appreciated and as a result its bilateral relations are diverse and complex. Due to this a few problems arise as far as trilateral cooperation is concerned. Besides, China has always emphasised bilateral cooperation over trilateral endeavours. To the extent that the three countries can cooperate on important issues like Iran, the cooperation will be beneficial; however, one must remember that bilateral economic cooperation is always greater than a trilateral arrangement. Thus areas where trilateral cooperation may be significant are limited. Trilateral relations may have been conceptualised in the Cold War, but are no longer relevant. Improved India-China relations, however, have emerged only in the last few years; therefore it would be correct to say that while the hope of better relations exists, the practical policy aimed at the same is missing.

The question of seeming Indian reluctance towards trilateral meetings must be understood within the context of recent developments. Though India had proposed at Vladivostok that the next meeting be held in New Delhi, the minister concerned now handles a different portfolio. This change in personnel is bound to alter matters. Also, India has been rather preoccupied with the Indo-US nuclear deal and this may be the reason for the delay of the meeting to April. If it appears that India is dragging its feet on the issue of trilateral meetings, it must be acknowledged that we have a cumbersome decision making process. For Russia though, it would seem that the nuclear deal is what has affected India's willingness to act quickly on trilateral meetings, this may not be true and the time is right for India to allay such fears.

Areas of Cooperation: Though areas of trilateral cooperation may be somewhat limited, important areas of bilateral cooperation do exist. The most important being 'energy'. On this issue, however, Russian policy seems somewhat difficult to understand. While Russia is seen as Saudi Arabia in Europe, it supplies gas and oil to Europe without hard bargaining on technology transfers and bargaining only on cost and pricing. The policy towards India and China is very different. Looking at the issue from the Indian or the Chinese perspective, why should technology transfers become a bargaining point when they are not an issue when discussing oil/gas supplies with the EU? This is an issue that needs to be addressed. Russian aspirations of developing its technology industry are well understood but, Russian policy must also take into account the energy needs of its partners.

Since the Russian market has displayed limited receptiveness towards traditional Indian consumer products, the focus of trade thus must be high-tech. This is an issue that Putin attempted to address during his 2004 visit. Efforts must therefore, be made to further trade in this area.

Cooperation in fields such as disaster prevention could be extremely helpful. Setting up disaster prevention centres would be a good investment because it would employ Russian technology.

The common interest of all three states - India, Russia and China could be in Central Asia. While Russia and China already enjoy clout in the region, India would do well to enter in discussions with the two states on how India may engage Central Asia. While a grouping may not be desirable, political support for cooperation is necessary.

Improving Relations: Russia appreciates the improved ties between India and China for it no longer needs to balance relations with one or the other. The relations between Russia and India need to be strengthened. The dichotomy between governmental understanding and mid-level perceptions is what must be addressed. Though some have suggested that the Russian government should be responsible for educating its public, others insist that the time is ripe for the Indian government to engage and win-over the Russian people. However, mid-level contact between intellectuals and institutions is what must be encouraged.

The declining contact between the respective media and intellectuals in the post-Soviet era must thus be rectified, for it is alarming that public opinion in a state considered a traditional ally by India is not favourable. As trade and communication at all levels grow, bilateral relations will undoubtedly see a vast improvement.

Maj Gen Dipankar Banerjee: As India and Russia both move to claim their place in the global order, greater cooperation between the two is very desirable. As traditional friends, it is hoped that cooperation between India and Russia continues and is strengthened. The prospect of trilateral cooperation between India, China and Russia, however, will remain somewhat dubious and limited as all three have other pressing concerns and interests that may be better addressed through different arrangements.

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2.
Passage to India - Russia Looks to Meet India’s Growing Energy Needs
Shaun Walker
Russia Profile
4/11/2006
(for personal use only)


The topics of volatile energy markets and the Sino-Indian economic boom often overlap. As these two new regional powers emerge, they will develop greater demands for energy to fuel their expanding economies, pushing up the price of oil further and putting more strain on the markets. For Russia, however, with its vast energy reserves, higher demands for oil and gas do not present the same worry as they do for Western Europe and the United States. Still, for a country anxious about its bleak demographic outlook, the growing populations of India and China, who together make up one-third of the world’s population, have to be a cause for concern.

Russian Ambassador to India Vyacheslav Trubnikov seemed to be unfazed by the burgeoning populace of India and China, and their unrelenting procession towards superpower status. Instead, he emphasizes the idea that Sino-Indian demands for energy are in fact a positive factor for Russia. “Yes, both India and China have tremendous human resources, rich histories and unique cultures, and they are both developing very fast in the most advanced spheres of industry,” said the ambassador. “But they lack energy resources, so both countries remain dependent on the rest of the world.”

To this end, Indian Prime Minister Manmohan Singh told journalists after meeting with Russian Prime Minister Mikhail Fradkov in New Delhi on March 17 that India hopes to receive one million barrels of oil a day from Russia by 2010. “The necessary infrastructure for this is already in place,” the Indian prime minister said.

When it comes to gas, the partnership is already in full swing, with Indian energy giant ONGC owning a $2.7 billion 20 percent stake in the Sakhalin-1 oil and gas development project, as well as expressing great interest in the proposed Sakhalin-2 and Sakhalin-3 sites. “India is prepared to take all the gas from the Sakhalin-1 site – probably in liquefied from, and probably on the basis of a swap agreement, to make it economically viable for three countries – for example by involving Japan,” said Ambassador Trubnikov. “We have very good experience with India here – when Iraq sold oil to India at our expense, and we sold our oil to the West at Iraq’s expense. We had a similar deal with Venezuela and Cuba during Soviet times. These swap deals are very efficient and this is an option to deal with the gas in Sakhalin.”

Another giant project that could come to fruition during the next decade is the long-discussed Iran-Pakistan-India pipeline. “This pipeline is tremendously important for India, though I think we are still some years away from its realization yet,” said Jyotsna Bakshi, a specialist on Russo-Indian relations at the Institute for Defence Studies and Analyses in New Delhi.

Although the three countries still have many issues to sort out before the pipeline becomes a reality, one major obstacle was removed recently when long-held U.S. objections to the pipeline were tentatively dropped during U.S. President George W. Bush’s visit to South Asia in March. “Unlike some other global powers that have been trying to pursue a policy of dictating to India and Pakistan with which of their neighbors they may or may not establish long-term relations in the oil and gas sector, Russia has always supported the pipeline project,” said Trubnikov. He refused to see the potential pipeline as a threat to Russian interests: “The pace of development in this region is so high that it will easily absorb any amount of hydrocarbons supplied to it, so we in no way see the gas pipeline hampering any future plans to deliver Russian crude oil or liquefied natural gas to India. Moreover the unique experience of Russian companies in pipeline construction with the Blue Stream project means that we are very interested in cooperating on this venture.” Gazprom representatives traveled with Fradkov to Delhi in March to begin discussions on construction of the pipeline, which is expected to cost around $7 billion.

For all the attempts to increase oil and gas imports, India is clearly aware of the dangers of fully relying on imports to fuel its economy. “At the moment we have to import 70 percent of our energy, and so it’s not a good strategy to remain reliant on hydrocarbons,” Bakshi said. “For successive Indian leaders, the nuclear issue has been hugely important to the strategy of Indian national development.”

Russia is currently at work on the construction of the nuclear plant at Kudankulum in India’s southern Tamil Nadu region, which will feature two reactors of 1000 megawatts each, and will be commissioned in 2008. Sergei Kiriyenko, head of Federal Atomic Energy Agency (Rosatom) was in India on April 6 to inspect the plant and hold talks with Indian officials. He became the first Rosatom head to visit the site of India’s nuclear plant, and promised that the Russian specialists aimed to have the plant up and running as soon as possible.

There are 24 Russian specialists working at the plant, and 70 percent of the equipment will be imported from Russia. The station has created 8,000 jobs for local residents. Kiriyenko spoke with local schoolchildren and explained to them that the plant would help boost the local economy. He also reinforced the importance of the Russo-Indian partnership, and took a swipe at unnamed Western countries, saying that Russia and India had a robust and friendly mutual relationship, and “unlike some countries, we actually reinforce it with action.”

Currently, Russia is unable to increase cooperation with India due to the informal requirements of its membership of the Nuclear Suppliers Group (NSG). India is not a signatory to the Non-Proliferation Treaty (NPT), and NSG members are not supposed to supply nuclear fuel to non-member states. As it is, the Russian supply of uranium to the Indian reactor irritated other NSG countries. But after visits to New Delhi by the French and U.S. presidents recently, all signs indicate that this could change.

“Russia fully supports the recent U.S. steps, and wants India to be treated differently from other non-signatories to the NPT, because it sees India as a reliable country,” said Vladimir Orlov, director of the PIR Center, a Moscow-based think tank dealing with nuclear issues. “I think that if France, Russia and the United States are agreed that there should be a new approach to India from the NSG, this is something the other members will find very hard to ignore.”

Likewise, Trubnikov welcomed the U.S. initiatives, suggesting that they were more likely to prompt further co-operation with Russia than squeeze the Russians out of the market. “We are not worried about other countries entering the market for civilian nuclear energy in India, because the market is huge,” said the ambassador. Moreover, Russia is in a prime position to win new contracts “The role of nuclear energy in India is going to significantly increase in the near future,” Sudhinder Thakur, the executive director of the Nuclear Power Corporation of India told RIA Novosti. “The fact that Russian companies are already working in India clearly gives them an advantage over companies from other countries,” he said.

Trubnikov expressed hopes that other countries will follow Russia’s lead in recognizing the uniqueness of India’s situation. “Russia has long been trying to convince its partners that the status quo with regard to India should be changed,” the ambassador said. “India has asserted itself as a country with an impressive democratic setup, a good non-proliferation track record, and strong export control over nuclear technology.”

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3.
Russia ready to invest in nuclear sector: Kirienko
The Hindu
4/10/2006
(for personal use only)


THIRUVANANTHAPURAM: The former Prime Minister of Russia, Sergei Kirienko, who now chairs the Atomic Energy Agency of the Federation, said here on Sunday that his country was ready to consider proposals for investment in the nuclear sector in India if international rules change.

Talking to mediapersons at the Russian Cultural Centre here, Mr. Kirienko said Russia was a member of the Nuclear Suppliers Group, and it supported and followed the group's regulations. Investments could be considered after change in the regulations.

His comments come against reports that India might open up its nuclear sector for foreign direct investment and that the Nuclear Suppliers Group may dilute some of its stringent regulations.

Mr. Kirienko said supply of more reactors to India could also be considered in the same context. International rules regarding controls would have to be followed.

He commented that India was a strategic partner of Russia. There was cooperation in different spheres.

Mr. Kirienko, who visited the Koodankulam nuclear plant in Tamil Nadu on Saturday, said two of the nuclear reactors there would be commissioned a few months ahead of schedule this year. Work on two other reactors was progressing.

Quality and safety of the Russian reactors for the project were being ensured.

Earlier, interacting with Russian language students in Kochi through Edusat after inaugurating a special Russian Language Course through Edusat, Mr. Kirienko said the Koodankulam project gave jobs to 8,000 persons.

Consul-General of Russia in Chennai Vladislav V. Antonyuk, Vice-Consul and Director, Cultural Centre of Russia in Chennai Stanislav I. Simakov and Director of the Centre Ratheesh C. Nair also spoke at the inaugural function.

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4.
Indo-Russian group to expedite commissioning of nuke plants
The Hindu
4/9/2006
(for personal use only)


A joint Indo-Russian group will be constituted to expedite the commissioning of two Russian-supplied 1000 MW Atomic Power Stations here as soon as possible without compromising on quality and security aspects, said former Russian Prime Minister and head of Federal Agency of Russia for Atomic Energy (Rosatom), Sergei Kiriyenko.

After reviewing the progress of construction of the Nuclear plants with Atomic Energy Commission Chairman, Anil Kakodkar, he told newspersons here that the group would be asked to submit a report in the middle of May.

"We will ensure the commissioning of Units one and two without any compromise on quality and security. That is our first priority," Kiriyenko said and added Russia and India had a long standing strategic partnership in dealing with Nuclear power.

"We also discussed the prospects of further co-operation of strategic partnership," the head of the Russia's Atomic Energy Agency said.

Kakodkar, who was also present said the Russian delegation's visit allowed both the countries to take stock of the progress of the project to ensure the smooth commissioning.

He also said the two Units would be commissioned in two phases.

Kiriyenko's visit gains significance, especially in the backdrop of increased civil nuclear cooperation between the two countries. It was in 1988 that the Indian Government entered into an agreement with the Government of the erstwhile USSR for setting up the plants at Kudankulam in Tirunelveli district.

The responsibility of entire plant design and the manufacturing and supply of all equipments, training of manpower for operation lies with the Russian side and the construction of infrastructure, contract management, erection, commissioning of equipments lies with the Indian side, undertaken by the Nuclear Power Corporation of India Ltd.

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5.
Russian guided by security interests in LEU deliveries to India
RIA Novosti
4/8/2006
(for personal use only)


Russia delivers low-enriched uranium to India while being guided by security interests, the head of Russia's nuclear power agency said Saturday.

"These deliveries are made in line with the main principles of the nuclear suppliers' group," Sergei Kiriyenko said after attending the Kudankulam nuclear power plant.

Russian Prime Minister Mikhail Fradkov earlier made an official visit to New Delhi, during which he said Russia would supply the fuel, adding that supplies were in the two countries' interests and did not contradict international commitments.

Moscow's intention to provide India with uranium provoked controversy among international nuclear suppliers. In early March, the United States agreed to share nuclear technology and fuel with India, which has not signed the Nuclear Non-Proliferation Treaty, the main tool in international disarmament efforts.

India in return pledged to separate its military and civil facilities and open nuclear power plants to UN inspections. The deal, yet to be formalized, is said to be crucial to India's booming economy.

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C.  Nuclear Industry

1.
When will the U.S. lift restrictions on Russian uranium exports?
Pyotr Goncharov
RIA Novosti
4/14/2006
(for personal use only)


Late last week Moscow hosted the fourth national energy forum on "Russia's Fuel and Energy Sector in the 21st Century."

The forum organizers and guests agreed that nuclear industry had entered a period of renaissance, which is logical in view of the common intention to reduce the share of hydrocarbons in the global energy balance.

However, participants in the roundtable that was held after the forum also pointed to certain "atavisms" in the development of the nuclear industry that do not fit the logic of constructive and equitable energy relations between Russia and the United States.

Why the two countries? Russia is the world's main provider of enriched uranium, and is likely to keep this position in the future, while the U.S. stubbornly upholds anti-dumping restrictions on the export of Russian uranium to the American market.

Delegates from private U.S. consumers of uranium, who attended the roundtable, clearly spoke for reviewing the policy of the US Department of Commerce regarding Russian suppliers.

Pacific Gas & Electric Corporation is for opening markets to various components of the nuclear fuel cycle and to uranium enrichment and conversion services, said the company's Vice President James A. Tramuto. This will allow diversifying the portfolio of suppliers by stipulating work with existing and future nuclear power plans, and in this way ensure the growth of supplies.

There are no reasons to keep the restrictions because the situation has changes since their introduction, said James Malone, Vice President of Nuclear Fuels, Exelon, the largest nuclear operator in the US.

Jeff Combs, President of the UX Consulting Company, said retaining the restrictions would slow down the development of the nuclear industry.

Uranium prices have doubled in the last two years. The world needs Russian uranium, and Russia should keep its leading place on the global uranium market, especially because American companies have 103 nuclear power units and only one fuel supplier in the U.S. This is clearly not enough to ensure the nuclear safety of the country now, let alone in the future when the U.S. will start building 13 new nuclear blocks.

As representatives of private companies, we are well aware of this, but the Department of Energy does not want to see the problem, the American guests of the Russian energy forum said.

According to Russia's Techsnabexport (Tenex), one of the world's largest producers and exporters of nuclear materials, services and equipment with the annual turnover of $2 billion, Russia has 50% of the world's uranium enrichment facilities. Russian enrichment technologies are the most efficient and profitable in the world. If Russia is given equal conditions with other countries on the global market of the nuclear fuel cycle, it will satisfy 25-30% of the world's demand, said Tenex head Vladimir Smirnov.

The anti-dumping restriction on Russia's uranium exports were imposed during the Soviet era, when the Soviet Ministry of Nuclear Energy delivered a huge amount of natural uranium on the world markets, including the United States, sending prices crashing. The anti-dumping procedure was complemented with restrictions on the Russian ministry. As a result, Russia now may operate on the U.S. market only through a special agent, who is actually its rival.

But the most paradoxical thing is that the world's most liberal American economy, of which Washington is rightly proud, is doing its best to save the unprofitable domestic producer. In fact, the U.S. uranium producers, who are using the technologies of the dawn of the nuclear era, survive only thanks to the Russian nuclear industry. Russian nuclear technologies have surged far ahead, and uranium export restrictions are doing colossal damage to the Russian enrichment and nuclear generation sectors.

Low enriched uranium is not the natural uranium against which the restrictions were designed, but fuel for nuclear power plants (NPP). Russian producers and American consumers cannot understand why enriched uranium, which is a high-tech service, should suffer from the restrictions.

But this is not all.

The anti-dumping procedure that is being used in the United States and several European countries does not spread to the 1993 HEU-LEU (highly enriched uranium - low enriched uranium) agreement signed for 20 years.

Under it, Russia removes 500 metric tons of highly enriched uranium from its scrapped warheads, converts it into low enriched uranium and delivers it to the Untied States as fuel for American NPPs.

The restrictions were suspended for the duration of the investigation, but the U.S. has set a quota stipulating a restrictive 116% duty on uranium exports made in excess of the quota. Russia has exhausted its quota in 2002. It can continue working despite the high duty, said Smirnov, but Tenex would appeal the size of the duty in case of the lifting of the anti-dumping measures. It will rely on the precedent of French company Areva, for which the duty was cut to near zero.

The next hearing on the anti-dumping measures is set for May 23 in Washington. Russia will demand the lifting of the discriminating restrictions on Russian deliveries of nuclear materials to the Untied States and Europe.

The Economics Ministry and the Federal Atomic Energy Agency of Russia have sent a letter to the U.S. Department of Commerce requesting that the anti-dumping measures regarding Russian suppliers of nuclear materials and services should be lifted and that they should be ensured free access to the American market.

The stand taken by the U.S. energy companies promises a positive solution, especially because the implementation of the ambitious nuclear program recently announced by the U.S. administration would be impossible without the liberalization of the American market of nuclear fuel and stable deliveries of Russian uranium.

The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.

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2.
Kiriyenko Is Exploring Possibilities in Asia
Rossiyskaya Gazeta
4/13/2006
(for personal use only)


Russian nuclear industry officials are seriously hoping to complete the construction of the second section of the Mochovce nuclear power plant in Slovakia. The presentation of our plans for the third and fourth blocks of this plant in Levice was a success.

An impressive landing party was sent there from Russia to underscore the competitive advantages of these plans and to convince the client of the strength of Russia's overall intentions. The delegation members included representatives of the Kurchatov Institute RNTs (Russian Science Center), the Atomenergoproyekt Institute in St. Petersburg, the Gidropress OKB (Experimental Design Bureau) in Podolsk, and Atomstroyeksport, serving as the national coordinator. The client's side was represented at the negotiations by the Slovenske Elektrarne joint-stock company and Italy's Enel, the company that owns 66 percent of this joint-stock company.

The construction of the Mochovce nuclear power plant with its VVER-440 reactors was actually launched pursuant to a 1980 Soviet-Czechoslovak intergovernmental agreement. The first block was completed in October 1998 and the second was completed in March 2000. The construction of the second section of the nuclear power plant was halted in 1992. According to Atomstroyeksport spokesmen, about 70 percent of the construction work had been completed by that time, and the technological portion was about 30-percent ready for operations.

After 10 years of uncertainty, the Slovak leadership resolved to finish building the second section of the Mochovce plant and expressed the wish to use as many of the previously completed elements as possible. Using Atomstroyeksport's mediating services, Russian experts conducted an on-site inspection of the state of the equipment and the quality of its storage. This was followed by a preliminary discussion of the possible degree of Russian involvement in the completion of the third and fourth blocks. These consultations are now expected to produce actual agreements.

Slovakia considered other bids in addition to the Russian proposals, specifically those of the Czech Skoda Company and a few other European firms competing in this market. Atomstroyeksport spokesmen believe their company has reason to anticipate a lucrative contract. In addition, they are still hoping to win the contract for the construction of the Belene nuclear power plant in Bulgaria. All of the necessary documents for that competitive bidding session have already been submitted.

In addition to seeking promising opportunities in Europe, the Russian atom still has its eye on Asia. "Nuclear Industry, China-2006," the largest international exhibition in Asia, just opened in Beijing as one of the events of "Russia Year" in China. The main Russian exporters in this field and the leading scientific research institutes are well represented there. Sun Qin, the head of the China Atomic Energy Authority, was one of the first to visit the Russian exposition.

Meanwhile, the head of Russia's Atomic Energy Agency, Sergey Kiriyenko, who was in China recently, will be taking another official trip in a few days. This time he will travel to India, where two blocks of the Kudamkulam nuclear power plant are being built according to Russian plans and with the assistance of Russian experts. Between business trips, the head of Rosatom (Federal Atomic Energy Agency) has managed to make some fundamental personnel decisions in his agency, including decisions affecting members of his own inner circle.

Evald Antipenko, one of the main members of the previous Rosatom chief's team, was removed from office as the deputy head of the agency. reported that Antipenko was in charge of finances and of the industry's price, rate, tax, and foreign economic policies and was responsible for investment and strategic planning, including the restructuring of the sector's property. Staffers in the Rosatom press office explained that "the functional duties of the deputy head of Rosatom will now be performed by Tatyana Yelfimova, adviser to the head of the agency." They also reported that she served as an aide to the RF president's plenipotentiary representative in the Volga Federal District, as the deputy plenipotentiary representative, and as the deputy chief of finances and economic administration on his staff and was in charge of interbudgetary relations there before she moved to Rosatom.

Tatyana Yelfimova's appointment was the second to dilute the exclusively male crew traditionally standing at the helm of the atomic industry. Anna Belova, familiar to many people from her earlier job at the Russian Railways Open Joint-Stock Company, had been appointed shortly before that as the adviser to the head of Rosatom on restructuring issues. Analysts have suggested that Sergey Kiriyenko is gradually filling his headquarters at No 24/26 Bolshaya Ordynka with the market experts and top managers he knows, because he believes he can only accomplish the required structural changes in the sector and give it the necessary dynamism with their help.

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3.
Nuclear Reactors Not To Be Built If Public Objects - Official
ITAR-TASS
4/13/2006
(for personal use only)


Russia will not launch the construction of nuclear reactors in this or that
region if its public is opposed to such projects, director of the Federal Agency
for Atomic Energy Sergei Kiriyenko said during a visit to the Volgodonskaya
nuclear power plant on Wednesday. Kiriyenko said he had talked with officials
from the Rostov region administrations and representatives of the public of the
town of Volgodonsk over the construction of the third and fourth reactors of
the local NPP.

"We are ready for it from the point of view of the demand for energy in the
southern federal district, there is such a demand, both the RAO UES electric
utility and the Ministry of Industry and Energy have confirmed it. However, the
question I asked of regional authorities and the public today is if they agree
with it, if they support it, and if they do, we'll go ahead. If there are
objections, then we'll finish the second block and take out the issue of the
construction of the third and fourth reactors; we'll launch it /construction/
in other regions," he said.

At present, there is rivalry between regions for hosting projects to build
nuclear power plants, because "three billion dollars are not an easy find."
"The regions where nuclear power plants have been built full-cycle, i.e.
with four reactors are, as a rule, one of the largest taxpayers, so from the
point of view of revenue and jobs, it's very advantageous," the Rosatom chief
said.

"For example, the construction of the third and fourth reactors means
thousands of highly paid jobs, it's large taxes," he said.

He underlined the commitment to the principle "never to go against a
coordinated position of regional authorities and the public."

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4.
What the papers say: "American nuclear producers ask for Russian uranium"
RIA Novosti
4/11/2006
(for personal use only)


U.S. nuclear consumers are lobbying for the 116% antidumping duty on Russian uranium imports to be abolished. If they succeed, Tenex (Techsnabexport), Russia's leading nuclear exporter, will enter the U.S. market of low-enriched uranium. Russia can meet over half of America's nuclear fuel demand, but officials say it cannot hope to gain more than $2-3 billion annually.

Uranium prices in the United States have soared by 13% already this year. Last year's growth stood at 80%. Jeff Combs, the president of Ux Consulting Company, a leader in American nuclear consulting, said that prices had stalled the industry's development and that the U.S. needed supplies from Russia.
At present, 50% of the fuel spent annually by U.S. nuclear power plants comes from Russia. But current fuel supplies are part of a non-profit contract, as low-enriched uranium falls under the HEU-LEU program, which converts high-enriched uranium from dismantled Russian nuclear warheads into low-enriched uranium to then be converted into nuclear fuel for U.S. commercial reactors. The program, part of a non-proliferation agreement between the U.S. and Russia signed in 1993, will be shut down in 2013.

Russia has been a problematic partner. In 1991, Russian producers placed a huge amount of natural uranium on the market and sent prices plunging. It was then that the 116% antidumping duty was introduced.

"The United States is dubious about Russian nuclear products," Tenex deputy head Valery Govorukhin said, adding that the company could promise potential partners that Russia would never again play with prices.

Russian suppliers could take up half of the American market. "Only half of Russia's capacities supply its domestic market, the rest can be exported," Govorukhin said. This is quite feasible as uranium production in Russia is becoming more efficient, he said. However, a source in the Federal Agency for Nuclear Power said that the company should not expect to gain more than $2-3 billion annually.

Original source: Biznes

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5.
Russia Eager to Get Back to U.S. Uranium Market
Kommersant
4/10/2006
(for personal use only)


Russia’s Economic Development Ministry and Federal Atomic Energy Agency have forwarded a letter to the U.S. Department of Commerce urging it to lift antidumping duties that narrow access of Russia’s exporters of nuclear materials to the U.S. market. The U.S. International Trade Commission may decide to cancel the 14-year long restrictions already this fall.

The United States set up the 116-percent barrier to Russia’s uranium in 1991, Galina Manilovskaya from Tekhsnabexport reminded at the yesterday’s round table dedicated to antidumping actions and attended by representatives of Federal Atomic Energy Agency, Russia’s biggest supplier of uranium, Tekhsnabexport, and U.S. power companies. In part and in whole, the deliveries stopped once the quotas went up in 2002.

Maintaining restrictions for Russia’s uranium is “the absolute archaism” today, when the energy resources fail to completely make up for the global demand, said Tekhsnabexport General Director Vladimir Smirnov.

Russia has 615,000 tons of uranium in explored resources, Vladimir Servetnik, deputy GD at Tekhsnabexport, said not long ago. Yakutia’s Elkon is the biggest of the recently explored deposits; its resources are estimated at 344,000 tons. Chita Region’s Streltsovskoe ore-bearing field has 150,000 tons of uranium and Russia may produce 70,000 tons more in Transbaikalia and other regions of Eastern Siberia.

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6.
Russia mulls uranium production abroad - official
RIA Novosti
4/10/2006
(for personal use only)


Russia is planning to produce uranium abroad while actively prospecting new deposits at home, a senior official at the country's nuclear-technology exporter said Monday.

"We intend to produce uranium around the world," said Vladimir Smirnov, general director of Techsnabexport, the state-controlled uranium supplier and provider of uranium enrichment services. "We are interested in reviving uranium markets in Africa and other countries."

South Africa, Namibia and Niger rank among the world's top 10 uranium producers.

Smirnov also said that shortly before the collapse of the Soviet Union production of uranium had been concentrated in Kyrgyzstan, Kazakhstan and Uzbekistan, while only one deposit was explored in Russia.

He said Russia should also expand uranium prospecting on its own territory to avoid a future nuclear fuel deficit as demand from its nuclear power industry grows.

Smirnov's deputy, Vladimir Servetnik, said in February that demand for uranium in Russia could grow from 8,300 tons in 2006 to 18,000 tons in 2020, and the country could face a shortage of uranium after 2035 if prospecting did not increase sharply in the near future.

Vladimir Bavlov, deputy head of the Federal Agency for the Management of Mineral Resources, earlier said that Russia's current uranium reserves stood at 830,000 tons, but that they would be depleted by 2015 if the country did not invest at least $10 billion in prospecting and increased uranium production to consumption levels by that time.

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D.  Nuclear Forces

1.
Designer announces changes in Russian nuclear missiles
Viktor Litovkin
RIA Novosti
4/14/2006
(for personal use only)


Russia will announce changes in its strategic nuclear capability by the end of the year, said Yury Solomonov, head and chief designer of the Moscow Institute of Thermal Technology (MITT), the designer of ground- and sea-launched nuclear missiles.

The chief designer, who has the ground-launched Topol-M (SS-25 Sickle) and the sea-launched Bulava-30 (SS-NX-30) intercontinental ballistic missile systems on his record, did not enlarge on details but stated that Moscow would have no less than 2,000 nuclear warheads by 2011, when the U.S.-Russian Strategic Offensive Reductions Treaty (SORT) will be nearing expiry. This is in line with the SORT's requiring that both sides should reduce their nuclear stockpiles to 1,700-2,200 warheads by December 31, 2012.

The statement was prompted by a question how Russia was going to maintain the SORT-approved number of warheads as many decommissioned 10-MIRV R-36MUTTKh/R-36M2 Voevodas (SS-18 Satan) and six-MIRV UR-100NUTTKhs (SS-19 Stiletto) were being replaced every year by single-warhead silo-based and road-mobile RT-2PM2 Topol-Ms.

"I cannot answer this question in detail right now," Solomonov said. "This is a confidential issue pertaining to the relations between our country and the United States. However, we are going to notify Washington of upcoming changes in our strategic nuclear forces within two months, and, I think, the information will become public by the end of the year."

Importantly, Solomonov said Russia was ahead of the rest of the world in missile defense penetration capability by at least 15 to 20 years. In the light of his earlier remarks that technologically both new missiles could carry no less than three warheads, defense experts are now convinced the announced changes will have to do with the number of warheads per missile.

Moreover, media reports, citing Moscow's recent disclosure of a six-MIRV Bulava, designed as part of Russia's effort to implement the Memorandum to START I (expires in 2009), suggested the number of MIRVs per missile was likely to grow to 10 shortly.

Solomonov made two other remarks that look important enough if put together. As the first road mobile missile regiment is to enter active service in 2008, the SS-NX-30 also has a three-year flight test program ahead, which means that the first Bulava-armed nuclear submarine Yury Dolgoruky (Project 955 Borei) will be commissioned in the same year and, probably, that the date should be seen as the next landmark for the qualitative development of Russia's nuclear capability.

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2.
Expert Says Russia Has Met Nuclear Arms Reduction Commitments
Interfax-AVN
4/13/2006
(for personal use only)


Moscow has fulfilled its commitment to reduce its number of tactical nuclear weapons, Colonel General Yevgeny Maslin, former head of the Defense Ministry's 12th department in charge of nuclear security, told Interfax-Military News Agency on Thursday.

"The U.S. and Soviet decisions to reduce tactical nuclear weapons were unilateral commitments initiated by the presidents. No documents to the effect were signed. Russia has obviously met its commitments," he said, referring to a statement by Assistant Secretary of State for International Security and Non-proliferation Stephen Rademaker.

Rademaker said that the United States had met its commitment of tactical nuclear weapons' reduction saying Russia had not.

The initiative did not stipulate the complete withdrawal of Russian tactical nuclear warheads from the European part of the country, Maslin said. "It was only a question of reducing the number of specific weapons, for instance artillery or aviation systems. Russia has fully met its commitments. In contrast to American weapons, ours are deployed only on our national territory," he said.

The United States is the only nuclear nation which has continued to base nuclear arms abroad, Maslin said.

He thinks that the further reduction of tactical nuclear weapons should be discussed only after the withdrawal of American nuclear warheads from Europe.

"The U.S. has long wanted to count our tactical nuclear weapons and start negotiating on their reduction. My opinion is that the U.S. should first remove its tactical nuclear weapons from Europe, and then we can summon all members of the nuclear club, including China, France and Great Britain, for discussing the future of tactical nuclear weapons," Maslin said.

Rademaker said on Wednesday that Russia has not fully met its commitments concerning reduction of tactical nuclear weapons in Europe. He said none of Russian officials responsible for this matter has told him about Russia meeting its commitments in full.

The assistant secretary has a limited number of tactical nuclear weapons in Western Europe. Russia has tactical nuclear weapons in Europe, too, he argued.

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3.
Expert: Russia To Have No Less Than 2,000 Nuclear Warheads By 2020
Interfax-AVN
4/13/2006
(for personal use only)


No less than 2,000 warheads will remain in Russia's Strategic Nuclear Forces by 2020, said Yury Solomonov, director general and designer general of the Moscow Heat Engineering Institute.

"Given the number of warheads Russia is allowed to have in accordance with the Strategic Offensive Reductions Treaty, by 2015, to say nothing of 2020, the missile grouping of the Russian Strategic Nuclear Forces will have no less than 2,000 warheads," Solomonov said at a news conference at the Interfax main office on Thursday.

Solomonov also said that the future makeup of the Russian Strategic Nuclear Forces is defined on the basis of current international agreements.

He recalled the Strategic Offense Reductions Treaty allows the parties, namely Russia and the U.S., to have from 1,700 to 2,200 warheads by the end of 2012.

The previous agreement, START, limited the number of Russian and U.S. warheads to 6,000.

The Moscow Heat Engineering Institute is the chief developer of the solid-propellant missile for the Bulava sea-based system and Topol-M stationary and mobile ground-based systems that will constitute the core of the Strategic Missile Forces in the future.

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4.
No Injuries in Russian Submarine Flash Fire
Interfax-AVN
4/13/2006
(for personal use only)


A flash fire occurred in a nuclear submarine of Russia's Pacific Fleet during
welding operations on Thursday. Smoke filled a compartment, Russian Navy
spokesman Igor Dygalo told Interfax on Thursday.

"A flash fire occurred and cloth was scorched during welding operations in a
submarine at a repair dock in Kamchatka on April 13. As a result, smoke filled
one of the submarine's compartments," Dygalo said.

"Official documents do not qualify the occurrence as a fire or an accident,"
Dygalo said.

"No one was hurt. The compartment was vented and the repair work resumed,"
the Navy spokesman said.

"There were no flames and no one was hurt. Nor were there any prerequisites
for an explosion or radioactive contamination," Dygalo said.

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5.
Northeast Russia Troops HQ Denies Information on Nuclear Submarine Blaze
ITAR-TASS
4/13/2006
(for personal use only)


The Headquarters of Northeast Russia force has officially denied information
concerning a blaze aboard a nuclear-powered submarine in the repairing dock
at the base in the town of Vilyuchinsk on the Kamchatka Peninsula.

An officer at the press center of the Northeast force told Itar-Tass on
Thursday that "a ship survivability training exercise" had been held on April
12. "A torch pot actuated" in one of the sub's compartments. A fire-fighting
team was called in to the scene. The efforts to extinguish "a simulated fire
involved servicemen". "There was no blaze" aboard the submarine in actual fact,
he emphasised. Thursday's reports about such an incident "are not true to
actuality," an officer at the Headquarters of the force stressed.

Meanwhile, an officer in the Armament Service of the Main Naval Headquarters
told an Itar-Tass correspondent in Moscow that a blaze did occur aboard the
submarine. "The blaze that occurred on Wednesday aboard the submarine that lies
up in the dock at the base in the town of Vilyuchinsk was immediately put out.
There are no problems with the nuclear reactor (of the sub). There were no
weapons on board the submarine," the officer said. He underlined that the
incident had not entailed radiological contamination hazards.

At the same time, an officer at the Vladivostok-based Military Prosecutor's
Office (MPO) of the Pacific Fleet told Itar-Tass that the MPO had not received
so far any information from Vilyuchinsk about an incident aboard a
nuclear-powered submarine.

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6.
Russian Designer: Bulava Missile May Have Sea, Ground-Launched Versions
ITAR-TASS
4/13/2006
(for personal use only)


The chief of the research and development institute that developed the
Bulava missile complex has confirmed that the missile can have sea-launched
and ground-launched versions.

"The national leadership has said more than once the Bulava missile was
conceived as an alterable technology that can be reconfigured for both the
naval and ground components of the strategic nuclear force. This is really so,
and I can confirm this as the chief designer," the head of the Institute of
Thermal Engineering, Yuri Solomonov, told the media.

Russia in 2006-2008 is to make at least ten launches of the strategic
sea-launched missile Bulava before it can enter duty in the Navy in 2008,
Solomonov said.

Bulava is created as a submarine-based missile complex for two types of
missile-carrying strategic submarines - the Dmitry Donskoi (project 941 Akula)
and the Yuri Dolgoruky (project 955 Borei), although the submarines' differ
greatly in displacement.

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7.
Russian Expert Says New Liquid-Propellant ICBM Development Inexpedient
Interfax-AVN
4/13/2006
(for personal use only)


Solid-propellant ICBMs enjoy undoubted advantages over liquid-propellant ones and will constitute the backbone of the Russian Strategic Nuclear Forces in the future, Yury Solomonov, director and designer general of the Moscow Heat Engineering Institute, told a news conference at the Interfax main office on Thursday.

"As far as combat employment is concerned, customers want to have fixed, silo-based, and mobile missile systems in the future. Given great lateral overloads (during transportation), a liquid-propellant ICBM cannot be mounted on a mobile launcher," Solomonov said.

According to him, mobile missile systems will be given the priority in the future Strategic Nuclear Forces in 2020-2050.

"Mobile ICBMs feature a ten-fold greater survivability after a response strike than fixed ones," he said.

Russia has given the U.S. coordinates of all silo-based ICBMs. "Silo-based systems will be destroyed 100% in a retaliatory strike," Solomonov said.

According to him, Simultaneous development of liquid- and solid-propellant missiles is economically inexpedient. "It is cheaper to develop a system with a standardized missile," Solomonov said.

He pointed out that the U.S., France, China, and Great Britain had already given up developing new liquid-propellant ICBMs. "Only solid-propellant engines are used in new missiles," he underlined.

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8.
Russian Expert: US Tactical Nukes in Europe Increase Terrorist Threats
Interfax-AVN
4/13/2006
(for personal use only)


Deployment of U.S. nuclear stocks in Western Europe is unjustified and increases the terrorist threat, Colonel General Yevgeny Maslin, ex-head of the 12th Directorate of the Russian Defense Ministry, responsible for nuclear security, told Interfax-Military News Agency on Thursday.

"The U.S. is the only state to store its nuclear weapons outside its territory. Existence of U.S. nuclear weapons in Western Europe, including Belgium, Italy, and Germany, is unjustified and increases the terrorist threat," Maslin said.

He commented on the recent statement of U.S. Assistant Secretary of State for Arms Control Stephen Rademaker that the U.S. had delivered on its promise to reduce the number of tactical nuclear weapons, deployed in Europe. At the same time he admitted that the U.S. still had its tactical nuclear warheads in Europe.

"The nuclear stock was aimed to offset the superiority of conventional weapons of the Warsaw Pact and contain Soviet tank armies. The presence of U.S. tactical nuclear weapons in Europe became unjustified when the Soviet Union withdrew its troops from Eastern Europe," Maslin said.

According to him, U.S. nuclear storage facilities are extra targets for terrorist attacks. "Just imagine what would happen if an aircraft, hijacked by terrorists, crashed on such a facility, say, in Belgium," Maslin said.

Europe is divided over U.S. storing its nuclear warhead on its territory, he argued. "The U.S. is coming under more criticism. Thus, U.S. claims that Russia has failed to comply with one or other commitment on nuclear stock reduction, are nothing but at attempt to shift the blame," he said.

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9.
U.S. State Department: Russia Yet To Carry Out Nuclear Initiative Commitments
Interfax
4/12/2006
(for personal use only)


Russia has not carried out its commitments to reduce tactical nuclear
weapons in Europe in full, according to the U.S. State Department.

"We believe that Russia has not completely fulfilled the Russian side of the
presidential nuclear initiatives. No Russian official with responsibility for
this matter has ever claimed to me that Russia has fully implemented the
presidential nuclear initiative," acting U.S. Assistant Secretary of State for
International Security and Non- Proliferation Stephen Rademaker said at a
Wednesday news conference at the Interfax office in Moscow.

"Certainly there have been steps taken by Russia, important steps in the
direction of fulfilling the presidential initiatives, but those steps fall
short of full implementation," he said.

In contrast "the United States has fully implemented its undertakings under
the presidential nuclear initiative. I am not aware of anyone in the Russian
government or elsewhere who questions that the United States has done so," he
said.

"The United States has a relatively small number of tactical nuclear weapons
in Western Europe. Russia also has tactical nuclear weapons," he said.
Rademaker said President George Bush Snr., and President Boris Yeltsin came
up with the initiative of reducing tactical nuclear weapons in Europe.

"These were parallel undertakings by the United States and Russia to reduce
the level of nonategic nuclear weapons deployed by each side. They did not
reflect an arms control agreement, they reflected parallel unilateral
undertakings," he said.

Responding to a question, Rademaker spoke of U.S. financial assistance to
Russia in the framework of threat reduction efforts and access to Russian
nuclear facilities.

He said that on the one hand there is the problem of reliable reporting to
the U.S. Congress on spending, on the other, "the efforts are perceived as
efforts to collect information, one can even say perceived as espionage by the
Russian authorities."

"So one of the practical challenges in implementing these programs is to
strike the balance between our need for accountability and Russia's need to be
satisfied that its national security is being protected," Rademaker said.

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10.
Russia: Academician on Likely Future Improvements in Submarines
Interfax-AVN
4/10/2006
(for personal use only)


The improvements in submarines at the present time will not be made in the form of changing generations as it was in the past, but in the course of mass-production of small series of subs, Academician Igor Spassky, director general and designer general of the Rubin naval design bureau, told Interfax-Military News Agency Monday.

"It seems reasonable to design sub-series of submarines, introducing something new every five to seven years, which means that no significant improvements in the general design of such subs will be made, while the weapons and internal equipment will be renewed," Spassky said.

According to him, such approach reminds one of the second-generation strategic sub development, when 15 years were spent to cover the road from Project 667A to Project 667BRDM designs.

"Foreign developers seem to have quite the same ideas," Spassky said. For instance, the U.S. is going to build its Virginia subs in small series so that each new submarine would have more advanced equipment installed, he emphasized and added that large improvements are planned, too.

According to him, the seventh Virginia class sub and all followers will have new power plants, based on the principles of motion with the help of a powerful electrically actuated screw.

The academician also said that a similar system will be installed in the Russian nuclear subs. "At least, in seven to ten years the design of the sub will be totally reconsidered," he said.

He added that the aforementioned approach poses new challenges to the developers. "Modernization of each sub will have to be organized swiftly to keep up with the new sub construction tempo," he said.

Spassky is positive that this is quite possible if new state-of-the-art designing methods are introduced, based on up-to-date computer technologies.

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11.
A Nuclear Tempest in a Teapot: The Tendency Toward Operations Using Force - Is not yet Cause for Alarm
Pavel Semenovich Zolotarev
Nezavisimoye Voyennoye Obozreniye
4/8/2006
(for personal use only)


About the Author: Reserve Major-General Pavel Semenovich Zolotarev - is a member of the Council on Foreign and Defense Policy and a professor of the Academy of Military Sciences.

The article in the March issue of the well-known American journal "Foreign Affairs" about the prospect of U.S. fundamental nuclear primacy has caused a totally inadequate reaction in the Russian mass media. But then again, the Russian experts, to whom the journalists turned for their opinions, reacted not to the article but to the assertion about the technical capability of the United States to conduct a surprise nuclear strike against Russia, to which Russia will not be able to retaliate. The experts were placed in the situation of "I haven't read it, but I categorically disagree".

The direction of the article of two American political science professors sooner deserves respect and not condemnation. The authors manifest concern about the fact that the United States has set the goal of securing its primacy in military might at the global level, and it has the capability to obtain a fundamental advantage over Russia in the nuclear weapons sphere, which could result in upsetting the parity that has developed. China is not defining its aspiration for a significant increase of its strategic nuclear weapons potential.

Under these conditions, a U.S. unilateral primacy could collide with the interests of ensuring Russia's security. The fear that the United States could attempt to use nuclear weapons for the forceful export of democracy and opposition to the proliferation of weapons of mass destruction and the growth of the nuclear potential of other states causes the greatest alarm of the article's authors.

Are there grounds to disagree with these assumptions? Perhaps not.

The aspiration for complete and global primacy in military might has been openly declared in the last two U.S. National Security strategies. The prospects of the development of strategic nuclear weapons, their role and place, and the views on employment were adequately completely set forth in the Nuclear Posture Review Report, January 8, 2002, and also in the Doctrine for Joint Nuclear Operations, March 15, 2006.

The state and prospects of the development of the Russian Strategic Nuclear Forces are also not a secret. The quantitative levels of the strategic nuclear weapons are defined by the Treaty on the Reduction of Strategic Offensive Potentials, which was signed by the presidents of Russia and the United States on May 24, 2002, in Moscow. There are problems with the rates of equipping the troops with new strategic platforms. We also know of the problems of the development of the Russian Missile Attack Warning System (SPRN).

There are problems, but there is no cause for excessive alarm. What has caused such a violent reaction to the American professors' article?

Judging by the reaction in the Russian mass media, the assertion about the possibility that the United States would conduct such a surprise attack against Russia, to which it will not be able to respond, has caused the greatest objection. Russia will not manage to conduct a launch under attack (prior to the American missile's warheads reaching their targets) due to a "breach" in the Missile Attack Warning System and a retaliatory strike (after the nuclear effect) will be impossible because there already will be nothing with which to retaliate.

At the same time, this assertion in the text of the article sounds adequately correct. The authors are only suggesting that there is the likelihood that the United States will obtain that capability in the future.

On what are the author's assumptions based? The results of computer modeling with the use of standard mathematical methods, which have already been employed for several decades, are laid at the foundation of their findings. The situation of a surprise attack against the Russian Strategic Nuclear Forces was modeled. The quantitative parameters of the sides' fighting strength were taken while proceeding from the data, which follows from the Treaty "On the Reduction of the Strategic Offensive Potentials", and also while taking into account the well-known plans of each of the sides for the realization of the Treaty and the development of their strategic nuclear forces. Judging by everything, the authors took into account open source data on the state of the platforms - the approximate number of submarines with strategic missiles on alert duty, the readiness of the strategic bombers to accomplish their combat mission, the reliability of the missiles with extended guaranteed service lives, and so forth.

We can assume that the initial modeling data and the range of its variation during the conduct of the calculations by the political science professors were specified in an adequately competent manner but it is totally incorrect to structure the assumptions and all the more so to draw political conclusions on the possible outcome of a surprise nuclear attack by one of the sides based upon these models. Research models have a totally different purpose. Using them, you can research the impact on the effectiveness of the combat employment of the structure of the strategic nuclear forces grouping. You can assess the role of some or other parameters of the platforms and warheads, and the effectiveness of the missile defense system penetration equipment. Using the research models, you can assess the effectiveness of the operation of the SYaS (Strategic Nuclear Forces) depending on the characteristics of the primary and reserve command and control systems and so forth, but no more.

It is impossible to draw conclusions on the possible outcome of actual combat operations based upon research models, no matter how improved the mathematical methods and computer modeling.

Beyond any reasonable doubt, we can obtain probability assessments on the capabilities of the opposing sides' retaliatory operations during the conduct of a surprise attack against it. But is it correct to draw political conclusions based upon that data? Even if the calculations will show that the probability of retaliatory operations is less than one thousandth, then from here it does not at all follow that you can bet on the conduct of that attack and resort to a policy of strict nuclear deterrence. The randomness of the outcome could be such that one thousandth of a successful launch under attack will be realized in the very first attempt, and there will already be no others.

Among the inadequately correct assertions, we can include the reference to the inability of the Missile Attack Warning System to detect missile launches from the water areas of the seas and to the readiness of the naval and aircraft component of the Strategic Nuclear Forces during the assessment of Russia's reaction to a surprise attack. Neither the naval nor the aviation components of the strategic nuclear forces of both Russia and the United States are designed for employment in a launch under attack. They can participate in a full-fledged manner either in a strike that has been prepared beforehand or in a retaliatory strike. Only the Strategic Missile Troops (RVSN) is capable of insuring the conduct of a launch under attack. What is more, that portion of them, which is deployed on mobile platforms, under unfavorable conditions (the country's military-political leadership doesn't made a decision in a timely manner) is capable of constituting the basis of a retaliatory strike. Therefore, the readiness of Russia's naval and aircraft platforms for possible retaliatory operations during the conduct of a surprise attack against the country does not play but the RVSN is constantly at a state of readiness for that situation. As for the Missile Attack Warning System, they are also giving up on it but, on the contrary, its capabilities are gradually increasing.

Nevertheless, while rejecting the possibility of the use of modeling research methods to substantiate those assumptions, which were made by the article's authors, it will not be superfluous to analyze the directions of the development of the American strategic forces. Maybe, they will actually be able to acquire those qualities in the foreseeable future, which will permit no single country to claim nuclear parity with the United States?

As it follows from the well-known documents, the U.S. strategic forces have been included in the composition of the new triad and the traditional nuclear triad - ground-based intercontinental missiles, missiles on submarines and missiles on aircraft platforms are only a component of the new triad. The functions of the new triad have been set forth in Strategic Command. The spheres of its activities are: nuclear deterrence; space operations; information operations; integrated missile defense; global command and control; the collection, fusion and analysis of information; global strikes; and, countering the proliferation of weapons of mass destruction. The employment of nuclear weapons is present in the sphere of nuclear deterrence and can be prescribed during the planning of global strikes. They plan to obtain the new qualitative capabilities, which are capable of impacting the effectiveness of the employment of the nuclear forces, during the course of the development of the capabilities for the organization and conduct of global strikes.

Global strikes first and foremost are envisioned for those variants of the development of the situation, when new unpredicted threats appear, regardless of their geographic location. The preparation of global strikes must be carried out in real time as a threat emerges with the appearance of targets, which are subject to destruction. The characteristics of the new targets must be determined in real time and, if they are mobile, then with the tracking of their changing coordinates. While taking into account that the conduct of global strikes can also envision the employment of nuclear weapons, from here it follows that the possibility of the employment of nuclear weapons against moving targets could substantially increase. It turns out to be a kind of nuclear reconnaissanceike complex. At the same time, the capabilities for the destruction of fixed hardened targets must increase through the appearance of special nuclear munitions for the destruction of deeply-buried targets.

Can we consider that the appearance of these new qualities could upset the strategic parity? We think not. The coordinates and the primary specifications of the fixed facilities of each of the sides have been known for a long time, just like we have the calculation of the needed weapons for their destruction. The appearance of new munitions will not radically change the picture. As for the tracking of moving targets in real time, much will depend on the capabilities for the number of targets that are being tracked simultaneously and the efficiency of the adjustment of the flight tasks for their destruction.

The capability for the simultaneous tracking of a large number of targets is not required for the preparation of global strikes against the new targets, but the capability for the operational maneuver of technical means of reconnaissance is needed for the rapid detection of targets in any new region. It is impossible to conceal the fact of the buildup of the system's capabilities for the continuous tracking of mobile targets of the Russian Strategic Nuclear Forces. If that mission will be assigned, then countermeasures will also be found. But in any case the detection of mobile targets is capable of only reducing the effectiveness of a retaliatory strike, but cannot impact the effectiveness of launch under attack operations.

So, it turns out that there is no cause for concern about the prospect of upsetting the nuclear parity between Russia and the United States. What is more, the parameters of that parity are totally different than in the "Cold War" period. While talking about new capabilities, we must also mention one more important factor. It has already been several years since the Memorandum on the Opening of the Joint Missile Attack Warning Systems' Data Exchange Center in Moscow, which envisions the joint continuous alert duty of Russian and American crews, was signed between Russia and the United States. After its opening, not only the risk of the random employment of nuclear weapons but even the purely theoretical possibility of the conduct of a surprise attack will be excluded.

Maybe there is a grain of truth in General Leonid Ivashov's assumption that this is a tailored article. But its appearance most likely randomly coincided with the Russian president's visit to China. The article's turn for publication in the magazine simply arrived. But while taking into account the article's actual content, and not what has been heard in the Russian mass media, another assumption is also legitimate. Isn't the reaction to this article also tailored? Who needed this tempest in a teapot? Maybe those people who want to see only an enemy in the United States of America in order to "force through" additional financing of the defense programs or to seek changes in the allocation of priorities in the financing of existing programs?

On the whole, we can thank the article's authors because they directed attention to those threats, which are associated with the U.S.'s significant preponderance in military might and the trend toward operations from a position of strength. The erroneous assumption about the possibility of the destruction of the Russian Strategic Nuclear Forces through a surprise attack has also turned out to be useful. In the cited example, it is very graphically clear which component of our strategic nuclear forces permits us to insure the accomplishment of the nuclear deterrence mission with minimal expenditures, while effectively accomplishing the missions under conditions of a launch under attack and a retaliatory strike.

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12.
THE PENTAGON DENOUNCES: THE US DEPARTMENT OF DEFENSE CATEGORICALLY DISAGREES WITH THE ARTICLE ON AMERICAN NUCLEAR STRATEGY PUBLISHED BY FOREIGN AFFAIRS
Sergei Grinayev
Defense and Security/Krasnaya Zvezda
(for personal use only)


THE US DEPARTMENT OF DEFENSE CATEGORICALLY DISAGREES WITH THE ARTICLE ON AMERICAN NUCLEAR STRATEGY PUBLISHED BY FOREIGN AFFAIRS; The Pentagon pleads innocent of what authors of the publication in The Foreign Affairs accuse it of.

The Pentagon usually declines comment on whatever is drafted and published by non-government specialists. The public outcry this particular publication caused throughout the world compelled it to make an exception in this case. The matter concerns the opinion of two political scientists from Notre-Dame and Pennsylvania universities that the Pentagon is working on several programs enhancing America's first nuclear strike capacities. This conviction is the gist of the publication in The Foreign Affairs.

A spokesman for the Pentagon began with saying that the US Department of Defense never exposes in detail its plans of deployment of nuclear missiles. That explained, he said that the American "deterrent potential" comprising "scattered ICBMs" and "high-survival rate underwater missile platforms" is supposed to convince every potential aggressor that "a crushing retaliation" from America is an inevitability that annuls all and any chances of "gaining an advantage". "Despite what the authors of the publication maintain, this is not the First Strike Strategy," he said.

The American specialist reminded journalists that US President George Bush proclaimed "a rapid progress to nuclear forces reduction" his objective as far back as in 2001. The US Administration had faithfully fulfilled it ever since. The Pentagon intends to reduce the number of its nuclear warheads by half and the number of the deployed ones by two thirds by 2012. The spokesman for the Pentagon also recollected the recent decision to cut the number of Minuteman-3 ballistic missiles by 10%.

The Pentagon is convinced that the political scientists have deliberately neglected to take all these facts into consideration. It should be noted meanwhile that the Pentagon official in his commentary did not say that the United States would never invoke the first strike right. Neither did he comment on the thesis in the publication that "elimination of Russian and Chinese long-range munitions arsenals with the very first strike will probably become possible for the United States in the near future."

Source: Krasnaya Zvezda, April 11, 2006, pp. 1, 3

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E.  Chemical Weapons Destruction

1.
U.S. missing chemical treaty deadline
United Press International
4/14/2006
(for personal use only)


The Pentagon told Congress this week the United States will miss the treaty deadline for eliminating its stockpile of chemical weapons.

U.S. Defense Secretary Donald Rumsfeld told the House and Senate Armed Services Committee in a letter that the April 2007 deadline to destroy 31,500 tons of declared chemical weapons is impossible too meet, as is the extended deadline of 2012.

"Current estimates indicate approximately 66 percent of the declared chemical weapons stockpile will be destroyed by April 2012," Rumsfeld wrote.

The United States has destroyed just under 40 percent of its stockpile thus far.

Rumsfeld's report comes two weeks after Peter Flory, the assistant defense secretary told Congress the chemical weapons facility being jointly constructed by the United States and Russia under the Cooperative Threat Reduction program in western Siberia has been further delayed more than a year, also pushing back Russia's ability to comply with the treaty deadline. The Shchuch'ye facility is meant to provide Russia a capability to eliminate some 2.1 million artillery shells and rockets loaded with nerve agent.

Russia has obtained extensions for the first three deadlines and the United States has already received an extension for the 45 percent destruction deadline.

The U.S. and Russian stockpiles are being destroyed in accordance with the 1997 Chemical Weapons Convention. The convention includes 168 member states, according to the U.S. State Department. Only a handful of countries, including North Korea, Iraq, are not members. Afghanistan ratified the treaty in 2003. Non-members are prohibited access to certain controlled chemicals.

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2.
International Inspectors Reported That the Storage Conditions of Chemical Weapons at the Maradykovskiy Facility Meet Standard Requirements
RIA Novosti
4/13/2006
(for personal use only)


The storage conditions of toxic agents at the facility in the settlement of Maradykovskiy (Kirov Oblast) meet standard requirements. That was the conclusion of the international inspectors who visited the facility, Mikhail Manin, the head of the Kirov Oblast government office handling convention-related issues, informed on Thursday.

"Six inspectors from the international Organization for the Prohibition of Chemical Weapons (OPCW), headed by Clarence Brown Lee (Australia), were working at the facility from 20 to 23 March.

"Their inspection did not reveal any irregularities and they had no complaints: The storage conditions for the chemical weapons meet the standard requirements, the quantity of weapons has not changed, and no munitions were moved without the inspectors' consent," Manin said.

The OPCW has 175 member-countries. The organization inspects all chemical weapons storage and destruction facilities regularly once a year. Inspectors verify the fulfillment of obligations stemming from the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction.

Manin also reported that the first section of the Maradykovskiy chemical weapons destruction facility will begin operating in July or August 2006. The plant for the destruction of chemical weapons in the settlement of Maradykovskiy will be the third in Russia.

Facilities were opened earlier in the settlement of Gornyy in Saratov Oblast and the city of Kambarka in the Udmurt Republic.

According to the international convention, Russia must destroy 20 percent of all the chemical weapons it inherited from the USSR by 2007. The entire stockpile must be destroyed by 2012.

Russia ratified the convention in 1997. According to this document, the chemical weapons are to be destroyed in four stages -- 1 percent in the first stage, 20 percent in the second, 45 percent in the third, and all remaining chemical weapons in the fourth.

Before the destruction process began, there were 40,000 tonnes of chemical weapons (chemical warfare agents) in Russia, stored in seven depots. The one in the settlement of Maradykovskiy was used for the storage of 6,936 tonnes of toxic agents (sarin, soman, V-X, and a mixture of mustard gas and lewisite), representing 17.4 percent of the total Russian stockpile.

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F.  Submarine Dismantlement

1.
Norway releases funding for AMEC sub transportation in a victory for Bellona
Charles Digges
Bellona Foundation
4/12/2006
(for personal use only)


The Norwegian Ministry of Foreign Affairs, in a victory for Bellona, has finally released funding to Norway’s Ministry of Defence to transport a dilapidated, decommissioned Russian November class submarine to dismantlement in a project that will cost the Norwegian Government NOK 20m, or some $3m, NRK television reported.

The funding—which hung on the nod by Norway’s nuclear regulatory agency, NRPA and the Foreign Affairs Ministry—only covers the transportation phase of the project. But it is still a major achievement that the Foreign Affairs Ministry has agreed to this phase of the task when its purse strings seemed so tightly wound just earlier this year.

In the opinion of many close observers, the Foreign Affairs Ministry feels it should be the primary representative of nuclear remediation projects in Russia, and that the hold up in funding was a result of internal government dissonance with the Arctic Military Environmental Co-operation (AMEC) group.

At issue is the solving of a possible dispute between the Foreign affairs Ministry and the Defence Ministry, which administers Norway’s participation in AMEC.

The United States, Russia and the UK are also members of this group, which is widely viewed as the environmental conscience of the Pentagon-run Co-operative Threat Reduction (CTR) programme.

The release of funding is a victory both for environmental saftey and for AMEC, of which Norway, the United States, Russia and the United Kingdom are members. The project to transport the submarine, known as the K-60—which is now located at the semi-operational Kola Peninsula port of Gremikha—to dismantlement, had previously been held up, according to AMEC officials, because the Norwegian Foreign Ministry would not release funding for the unique project.

Yet the project with the K-60 could be Norway’s swan-song in AMEC involvement given earlier disputes not only within its own government, but waves made by AMEC’s newest Member, the UK, which publicised a highly critical and divisive document of Norway and the United States’ handling of their AMEC projects during principles’ meeting last year.

As a result, Norway and particularly the United States took issue with the UK’s handling of its AMEC projects—saying that the military to military arrangement of AMEC was becoming subject to commercial forces due to the UK’s reliance on RWE NUKEN, a private British contractor.

Russia has meanwhile watched on in concern that Norway and other AMEC partners would abandon it because of the perceived divisive roll the UK is playing. But for now, accord has been reached, and, according to AMEC co-chair Ingerd Kroken, agreement for at least the transportation of the vessel via a heavy life ship is at hand.

The Transportation of the K-60
The K-60, by all accounts, represents one of the most dilapidated submarines in the Northern Fleet. Rusted throughout, it cannot be transported on its own hull, even with the support of pontoons. Therefore, according to project director Thor Engøy, it will be transported in a heavy transport vessel. The vessel has been secured by Norway for use from the Dutch firm Dockwise.

According to Engøy, the heavy transport vessel has the ability to submerge its specially fitted deck beneath the K-60 and then blow its ballast tanks and rise again to the surface with the K-60 secured in special above-water cradles for its fragile hull. The transport vessel will then continue from Gremikha to Polyarny near Murmansk were it will be de-fueled and dismantled.

Securing the funding to move this dangerous vessel from the Foreign Affairs Ministry is a great triumph both for Bellona and AMEC alike.

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G.  Scientist Redirection

1.
ISTC approves four projects in Kazakhstan
newKerala.com
4/13/2006
(for personal use only)


Moscow: The International Science and Technology Centre (ISTC) approved financing for four new projects by Kazakh scientists worth 1.1 million dollars at its recent board meeting in Moscow.

The ISTC, established by the U.S., EU, Japan, Canada, Russia and South Korea, as a non-proliferation program in November 1992, has helped hundreds of former weapons of mass destruction scientists in Russia, Kazakhstan and other former Soviet states find more peaceful and profitable applications for their expertise.

Through its political, legal and financial frameworks, the ISTC contributes to fundamental research, international programs and innovation, and commercialization, by linking the demands of international markets with a pool of scientific talent available in research institutes in these countries.

Kazakhstan, which had been home to key elements of nuclear and biological weapons programs of the former Soviet Union, joined the ISTC in 1995. Since then, Kazakh scientists have received grants worth more than 50 million dollars.

The four Kazakh projects recently approved may be beneficial in solar energy production, medicine, and the oil and gas industry. They include:

- Developing electric concretion of thin films of semiconductors to be used in the creation of highly effective solar elements.

- Exploring new antibiotics from actinomicetes in Kazakhstan’s soils which can be used to treat resistant staphylococci infections.

- Monitoring brucellosis in humans and animals in Kazakhstan

- Complex inspection and development of technologies to liquidate exploratory oil wells in the flooding zone by the Caspian Sea in the Mangistau region of Kazakhstan.

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2.
Press Release
International Science and Technology Center
4/5/2006
(for personal use only)


Working in partnership with the UK’s Ministry of Defence, ISTC has held a two-day training seminar in Georgia to assist scientists and ISTC project participants, as well as heads of leading institutes and government representatives from Russia, Georgia, and the Kyrgyz Republic, to better understand issues related to Intellectual Property Rights (IPR).

The seminar gave an overview of IPR principals, outlining main differences between international and national procedures in handing intellectual property. Speakers from the United States, UK, Russia and Georgia provided general rules, methods of IPR protection and presented examples of IPR usage in innovation and commercialization.

A Georgian specialist on IPR, Mr. Dzamukashvili focused on the specific features of Georgian legislation, organizations and procedures in the IPR area. Tim Rubidge from Synergis Technologies Ltd., UK discussed how to move research results from the laboratory to the commercial market place and explained how scientific facilities and technical capabilities may be used to generate new income streams.

Robert Teets, ISTC’s Chief Legal Officer, presented on the challenge of recognizing, protecting and realizing an institute’s IPR, including any which has been created during an ISTC project. Vladimir Urezchenko, ISTC IPR Coordinator, detailed outline definitions of IPR and described how ISTC operates with regard to this subject.

The final part of the seminar covered practical issues on IPR and offered recommendations on handling intellectual property rights using guidelines developed, in many cases, through ISTC project results.

The seminar was run as part of a series of activities undertaken by ISTC offering scientists, researchers and institute heads from Russia and the CIS business training and practical examples of how to both protect and benefit from their research and development activities.

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H.  Nuclear Security

1.
Chernyobyl-like slovenliness today: RTGs are being vandalized near Norilsk
Rashid Alimov and Vera Ponomareva
Bellona Foundation
4/12/2006
(for personal use only)


At the end of March near Norilsk in the Krasnoyarsk region four of eight unguarded Radioisotope Thermo-electric Generators (RTGs) with strontium-90 power cores were dismantled by non-ferrous metals scavengers. Bellona learned of the incident from local residents.

Because of a lack of funds at the end of 2005 during the transfer of a branch of military guard 96211 from territory occupied 60 kilometers to the south of Norilsk, the RTGs were left without any kind of human protection. The vandalism of the units was discovered only at the end of March, but no official announcement was made. According to some sources, the RTGs are still unguarded even now.

Vladimir Chuprov, from Greenpeace Russia, said: “The incident at Chernobyl was most likely the result of the so-called ‘human factor’. What is happening now near Norilsk shows that the atomic sphere, where any mistake runs an extremely high cost, can not be protected from similar slovenliness?and Chernobyl-like absentmindedness threatens us even 20 years after that disaster.”

Greenpeace and Bellona learned of the incident from local residents. Today Bellona has sent an official inquiry about the measures being undertaken by the General Prosecutor’s office and the Military Prosecutor of Siberia’s Military region to deal with the consequences of the incident.

Each RTG has a capsule of highly active strontium-90?a radioisotopic heat source. A large number of RTGs were manufactured between 1960 and 1980 to operate lighthouses situated along unpopulated coastlines.

Today, when strontium can easily end up in the hands of terrorists and thus be employed in a dirty bombs, this is an unacceptable security sitation. With the help of western nations, Russia is decommissioning these devices.

Vladimir Chuprov, from Greenpeace Russia, said: “The incident at Chernobyl was most likely the result of the so-called ‘human factor’. What is happening now near Norilsk shows that the atomic sphere, where any mistake runs an extremely high cost, can not be protected from similar slovenliness?and Chernobyl-like absentmindedness threatens us even 20 years after that disaster.”

Greenpeace and Bellona learned of the incident from local residents. Today Bellona has sent an official inquiry about the measures being undertaken by the General Prosecutor’s office and the Military Prosecutor of Siberia’s Military region to deal with the consequences of the incident.

Each RTG has a capsule of highly active strontium-90?a radioisotopic heat source. A large number of RTGs were manufactured between 1960 and 1980 to operate lighthouses situated along unpopulated coastlines.

Today, when strontium can easily end up in the hands of terrorists and thus be employed in a dirty bombs, this is an unacceptable security sitation. With the help of western nations, Russia is decommissioning these devices.

The list of incidents with RTGs—including the leakage of strontium into the environment in 2004 at Cape Navarin—have been included in a working document produced by Bellona.

The VNIITFA Commission
A commission of the The All Russian Institute of Technical Physics and Automation (VNIITFA in its Russian acronym), which developed RTGs in 1960 and 1980s, is expected to arrive in Norilsk. However, no concrete agreement for their arrival has been reached.

“The negotiations on the export of these RTGs are being carried out, and we are ready to transport them, but the question is when the organization that has been exploiting the materials can pay for the work,” said Anatoly Platov of VNIITFA in an interview with Bellona Web.

“The question is only now being decided, but the RTGs need to be removed immediately. If this continues then by the summer they will all have been dismantled and vandalized,” according to a local resident in conversation with Bellona Web.

Eight unguarded RTGs of the Gorn type compose the Gletcher energy complex. Every RTG of the Gorn type has a thermal capacity of 1100 watts, and an electricity-producing output of 60 watts, The radioisotope source of heat possesses 170,000 curies of radioactivity.

The facility for building RTGs for military detachments?which itself is located close to Dubny in the Moscow region? was established in 1992 and were used for fueling special equipment.

In answer to the question about radiation background level near the RTGs Platov said: “Judging by the photographs, which were given to us, these RTGs don’t present any danger. But we once again stress the fact that we have not been there yet.”

“Such instances [of vandalism and metal scavenging] do not occur very often, they are rare, but they do happen. Each time all depends on the level of education of those who are responsible for their dismantling and theft.”

500 Meters
According to the data received by Bellona Web from sources in Norilsk, metal thieves have removed the metal protective covering of the RTGs and left the strontium in place.

In November 2003 in the Murmansk Region, metal thieves disposed of the strontium capsules after disassembling RTGs of the Beta-M type. At that time the Murmansk administration released a statement that the strontium capsules “were the source of heightened radiation risk with the capacity to spread harmful in the amount of 1000 rentgoens per hour. The presence of animal or human population within a 500 meter radius presents a serious health risk, and even the possibility of death.”

The activity of the radioisotope heat source in Gorn RTGs, of the type vandalized near Norlisk, is almost 5 times higher than in Beta-M RTGs. According to Norilsk officials, the thieves themselves, apparently using cross-country vehicles to reach the RTGs, where detained and criminal charges have been filed.

Defense Ministry: a state within a state
“I haven’t been informed [that RTGs were vandalized]. I have information, that within 60 kilometres of Norilsk, where a closed military unit had been situated, there are RTGs. They are controlled, but unguarded: an officer visits them occasionally,” said Vladimir Prilepskikh, the head of the Siberian branch of the Federal Service for Energy, Technology and Atomic Oversight (FSETAN in its Russian abbreviation).

Prilepskikh told Bellona Web that last week the RTGs were inspected by representatives of the prosecutors’ office, and that this week they should be inspected by the Emergency Ministry and the Federal Security Service.

The Federal Security Service branch in Krasnoyarsk refused to comment to Bellona Web, claiming that “there is no such information in our daily report.”

“The owner of these RTGs is the Defense Ministry. And while the Defense Ministry is in some ways a state inside a state, RTGs are not controlled by us”, Prilepskikh said.

Currently, following governmental decree 1007, issued September 4, 1999, and directive D-3 of the Defence Ministry, nuclear oversight service grants licenses and inspects Defence Ministry RTGs, as they are considered nuclear installations that do not pertain to military use.

But, in fact, it is the Defence Ministry that is responsible for radiation and nuclear safety in the military units, so the control in the military areas is executed by military nuclear regulatory bodies, and nuclear regulators of the FSETAN often do not have access to military RTGs.

“As citizens we are outraged that such things happen, and as the representatives of state [nuclear] oversight we want everything to get back to normal. But we are not listened to,” Prilepskikh added.

A Defence Ministry press service representative, Yuri Ivanov, refused to comment the situation, saying Bellona Web should send a written inquiry to the Ministry.

Another RTGs incident in Norilsk in 2004
Norilsk has already seen a similar incident. Three derelict RTGs were found on the territory of military unit 40919. According to the unit commander, these RTGs were left by another military unit, previously based at this site. The Krasnoyarsk branch of FSETAN reported that radiation doses at a distance of one metre from the RTGs exceeded natural background radiation by 155 times. Rather than solving the problem within the Ministry of Defence, the military unit, in which RTGs were found, sent a letter to the Kvant radiation technological company in Krasnoyarsk, asking them to remove RTGs for disposal.

Decommissioning
“There is one problem with RTGs: they all have surpassed their service allotment,” said Prilepskikh.

“The majority of RTGs are owned by the Hydrographic Facility of the Ministry of Transportation. But they are not able to control them and provide for their maintenance, they simply don’t have the money to visit them all.”

In 1960 through 1980, the Soviet Union produced about 1500 RTGs, and all of them have long exhausted their 10-year engineered life spans and are in dire need of dismantling. The urgency of this task is underscored by the recent incidents with these potentially dangerous radioactive sources. At best, any given RTG is inspected once a year.

“Russia brought the matter up to the international level, now the country receives money to solve the problem from the West. Though in my opinion, we should have our own money for this,” Prilepskikh said.

Currently, RTGs are removed and decommissioned with assistance from Norway and the United States. Russia is also negotiating the possibility of aid from Germany, Canada and France.

Negotiations on creation of a master-plan to decommission all the RTGs are going on as well. The possibility of such a master plan was laid out in the Group of Eight Industrialised Nations’ (G-8) Global Partnership annual report of the Gleneagles G-8 Summit in 2005.

This master plan would be akin to the recently published master-plan on decommissioning of the nuclear submarines and several other objects in Northwest Russia. Such a mater plan should stipulate all the priority measures, and transparency in spending by Rosatom.

The lack of transparency in spending international support funds has often been criticized, including in a report by Russia’s Audit Chamber. The report, analyzing activities of Minatom (Rosatom’s predecessor ministry) in 2002, mentioned that Western donors pay two times more for the same decommissioning operations Russia carries out.


Bellona states that the only guarantee of transparency in carrying out decommissioning projects can be public participation. In a letter, received by Bellona on April 10th Rosatom promised that “public consultations on the RTGs master plan will be held”.

In the beginning of April 2006, Rosatom signed an agreement with Canada, according to which Canada will fund a feasibility study for the preparation of the RTGs master-plan. Apart from Rosatom, the Russian group to prepare such mater-plan is comprised by the Defense Ministry, the Ministry of Transportation and FSETAN.

According to what was written in the Rosatom letter, currently “at various locations in Russia there are 651 RTGs, which are subject to decommissioning or replacement with alternative sources of energy”.

With Norwegian financial aid, RTGs in the lighthouses of the Russian Northwest have replaced with solar panels. The co-operative agreement is scheduled to last though 2008.

From the beginning of 2001 to the end of 2005, 295 RTGs have been removed from the coasts of the Northern Shipping route; of these 214 have been dismantled. In 2005, 65 RTGs were removed, including 24 from the Northern Shipping route coasts.

Derelict sources
The problem of derelict sources of radiation is not limit only to RTGs. Other sources exist as well, and as a rule local administrations lack funds for their removal.

“The problem with derelict sources of radiation is very acute. We find two or three such sources every year. And it has become ordinary. In my opinion, it happens because no one wants to establish order. In 10 years we have found not a single owner of the derelict sources,” Prilepskikh said.

“Our [FSETAN] representative applied to the Ministry of Finances, and received the answer that local administration did not ask for the money for such tasks.”

According to Prilepskikh, the only region in the West Siberia, where such problem has been resolved, is the Irkutsk region: “The city administration made an agreement with the Radon combine, paid money, and now Radon comes and takes the sources away”.

Radon combines, situated in 15 Russian cities, are designed only for handling low- and medium-level radioactive waste, while RTGs pertain to high-level waste.

There are no such agreements in the Novosibirsk region, said Prilepskikh.

“The governor simply calls to the Novosibirsk plant of chemical concentrates and asks to take radiation sources away,” he said.
Prilepskikh also mentioned that local administrations are held responsible for the sources, which were owned by subsequently bankrupted companies.

“In the law ‘On bankruptcy’ it is stipulated that the bankrupt company has to pay salaries to the workers and some debts, but it is not stated anywhere that they have to secure their territory and the radiation sources.”

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2.
Ivanov Warns of 1,152 Firms
Nabi Abdullaev
The Moscow Times
4/12/2006
(for personal use only)


The Defense Ministry has compiled a list of organizations suspected of helping to proliferate weapons of mass destruction and is urging Russian companies to be cautious in dealing with them.

A total of 1,152 foreign companies in 51 countries are included on the list, Defense Minister Sergei Ivanov told a Cabinet meeting on Monday.

"This is not a blacklist. This is a list of foreign organizations that one needs to be particularly cautious of and particularly circumspect around when it comes to communications and trade," Ivanov, who also is a deputy prime minister, said at the meeting attended by President Vladimir Putin.

A defense analyst scoffed at the list, calling it little more than a publicity stunt ahead of the Group of Eight summit in St. Petersburg in July meant to show that Russia -- like the West -- is serious about fighting proliferation. A G8 working group on the nonproliferation of nuclear weapons is to meet in Moscow on Thursday. Ivanov said the information on the list would help Russian officials draft a report on Russia's nonproliferation efforts for the G8 summit and that the details of the list would be released at the summit.

"We will tell about our control system for exports and will provide an evaluation of the activities of various foreign organizations and countries in fighting this very serious threat," he said.

Ivanov said that Russian companies that wanted to deal with the listed organizations would have to obtain a license from the government. He said the government would also demand the right to check whether dual technologies and products sold by Russian companies were used for their stated intentions.

European countries and the United States have repeatedly accused Russian companies of exporting sensitive technologies to so-called rogue countries. The accusations have intensified in recent years as Iran, where Russia is building a nuclear power station, has shown its interest in developing its own nuclear program.

Ivanov, who was appointed as the head of a government commission on export controls in November, called the accusations "nonsensical" and "delirious."

Konstantin Makiyenko, an analyst with the Center for Analysis of Strategies and Technologies, called Ivanov's announcement a PR stunt ahead of the G8 summit and expressed skepticism that the list even existed.

"The mere number of companies on the list raises doubt," he said. "It is an unbelievable number."

Ivanov said the list was compiled from information provided by the Foreign Ministry and intelligence agencies. He said similar lists were compiled by "every civilized country in the world."

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3.
Russia: Canada To Contribute to Dismantling of Nuclear Electric Power Generators
Interfax-AVN
4/10/2006
(for personal use only)


Canada will earmark assets for the development of the strategic plan on dismantling radioisotope electric power generators.

The Russian Atomic Energy Agency (Rosatom) and Canada signed an agreement to this effect, a spokesman for the department of nuclear dangerous installation dismantling told Interfax Monday.

According to him, there are 651 such generators on the Russian coastline, which should be dismantled and replaced with alternative power stations to supply electric power to lighthouses and other Russian navigation markers. The generators are maintained by the Ministry of Transportation and the Hydrographic Service of the Russian Navy.

The spokesman noted that the generators are disassembled in Moscow with sources of radio-nuclei taken from them and then sent to the Mayak plant in the Chelyabinsk region.

However, he said that negotiations are now on to build a heat chamber at Mayak, as well as to work out transportation schemes that will envisage that the generators will not be taken to Moscow for disassembling.

For instance, it is possible that additional interim storage facilities for generators will be built, including at the Radon and DalRAO companies.

Speaking of the Western donors for decommissioning the generators, the spokesman said that the Murmansk region administration had coordinated a plan of generator scrapping with Norway until 2008. In addition to that, Canada and France also voiced intention to assist, as well as Germany.

According to experts, all such generators will be scrapped in northwestern Russia in the near future. However, Rosatom's specialists think that the donations are insufficient to solve the riddle in the Pacific region and the rest of northern Russia, and especially so within the background of the fact that scrapping of generators and their replacement with alternative power sources in those regions will cost two or even three times as much as in the European part of Russia.

The first part of the strategic master plan was developed and adopted at the request of the European Bank of Reconstruction and Development earlier, specifying the actions to be taken to scrap nuclear powered submarines and ships of the Russian Navy in northwestern Russia, as well as to provide ecological rehabilitation of coastal facilities. The second part of the plan is expected to be completed this autumn.

The radioisotope electric power generators have been used to ensure self-sustained operation of navigation markers on unequipped coasts in places with difficult access since 1960s. The generators convert heat of radioactive Strontium-90 into electric power for lighthouses.

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4.
Ukrainian Deputy: 250 Nuclear Warheads Lost 'on Paper' During Transfer to Russia
FOCUS News Agency
4/10/2006
(for personal use only)


(Focus) Were nuclear warheads lost when the nuclear weapons were passed from Ukraine to Russia in 1992?

(Synchenko) According to our investigations, 250 warheads less arrived than we delivered.

(Focus) Are there indications that the weapons might have ended up in the hands of third parties, in Iran, for instance?

(Synchenko) No, we do not have any indications of this.

(Focus) But the 250 warheads have disappeared?

(Synchenko) Yes -- on paper. I am convinced that this was just sloppiness in accounting and that the warheads have not really been lost.

(Focus) This indicates an irresponsible way of dealing with nuclear weapons.

(Synchenko) The accounting was unprofessional. Obviously, nobody considered it necessary to count twice. When I learned this, I was shocked how irresponsible the dealings with nuclear weapons were.

(Focus) Russia says your accusations are nonsense. . . .

(Synchenko) We have all documents. They clearly prove the sloppiness.

(Focus) What will happen now?

(Synchenko) The Ukrainian public prosecutor's office has been informed, and we hope that it will start investigations.

[Serhij Sintschenko is a deputy of the Ukrainian Verkhovna Rada and heads the commission investigating the issue.]

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I.  Cooperative Threat Reduction

1.
U.S. hopes for extension of threat reduction program with Russia
Interfax
4/12/2006
(for personal use only)


The United States hopes to agree on an extension to the Cooperative Threat Reduction (CTR) program with Russia, Acting U.S. Assistant Secretary of State for International Security and Non-Proliferation Stephen Rademaker said.

"We have had a difficult time wrestling with the issue of liability. But recently we have made progress in this area and we do expect it will be possible to reach agreement on CTR extension," he told a Wednesday news conference at the Interfax office in Moscow.

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2.
U.S. strategic arsenal to be cut by 80% by 2012 - official
Interfax
4/12/2006
(for personal use only)


The United States will reduce its strategic nuclear arsenal by 80% compared to cold war times by the year 2012, acting U.S. Assistant Secretary of State for International Security and Non-Proliferation Stephen Rademaker said at a Wednesday news conference at the Interfax office in Moscow.

Commenting on a recent article in Foreign Affairs journal claiming that U.S. nuclear potential had grown much stronger since the end of the cold war he said that "it is demonstrably untrue that the United States' nuclear forces have not grown stronger since the end of the cold war."

However, "the Moscow treaty of 2003 provides for a two-thirds reduction in the number of strategic nuclear warheads by the year 2012 in the United States and Russia," he said.

"Under the previous arms control agreement START, Russia and the United States were limited to 6,000 nuclear warheads each. Under the Moscow treaty each of the sides promised to reduce to a level of 1,700 to 2,200 by the year 2012," Rademaker said.

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3.
U.S.-Russian war center still stalled
ERIC ROSENBERG
Hearst News Service
4/9/2006
(for personal use only)


Nearly six years after the U.S. and Russia agreed to build a joint military center in Moscow to reduce the risk of accidental nuclear war, work on the project has stalled because the two nations can't agree about taxes and legal liability.

The project announced by President Clinton and Russian President Vladimir Putin in June 2000 was to be completed in 2001. But aside from identifying the site and setting up some communications cables, no work has been done to make the center a reality.

The United States wants the American contractors building the Moscow-based Joint Data Exchange Center to be exempt from most Russian taxes and to have as little legal liability as possible should U.S. or Russian construction workers or others be injured on the job. The Russians, meanwhile, want to tax the U.S. construction companies and to have the right to sue the contractors for any negligence that might arise. advertisement

At the announcement ceremony almost six years ago, Clinton touted the center as "terribly important."

"In this new center, Russian and American military officials will be working . . . to monitor missile warning information. It is a milestone in enhancing strategic stability, and I welcome it," Clinton said.

Two years later, President Bush and Putin reaffirmed the need for the center. Later, the Russians said the center would be housed in a former kindergarten in Moscow.

The center was conceived as a place where U.S. and Russian military planners could share early warning information on missile launches. The idea is that such sharing would reduce the risk that one side might misinterpret a missile test or space launch from the other as a missile attack, prompting a retaliatory nuclear strike.

Russia and the United States account for more than 90 percent of the world's atomic bombs.

Russian spokesman Yevgeniy Khorishko confirmed that taxes and legal liability were the major obstacles thwarting progress on the center.

Negotiations are ongoing with the United States, he said, and "the parties are trying to find common ground. The parties expect that this center will be online very soon." He declined to specify a date.

Retired Sen. Sam Nunn, D-Ga., former chairman of the Senate Armed Services Committee and an expert on arms control and nuclear weapons safety, said it should be a top priority for Bush and Putin "to break through the bureaucratic roadblocks that have . . . kept the center from getting up and running."

Nunn is co-chairman of the nonpartisan Nuclear Threat Initiative, an organization aimed at reducing the threat of nuclear war.

The majority of U.S. funds to construct the $7 million facility can't be spent, Congress directed in 2002, until both sides sign an agreement "exempting the United States and any United States person from Russian taxes, and from liability under Russian laws, with respect to activities associated with the Joint Data Exchange Center."

Legal liability concerns also have slowed work on a U.S. effort to help Russia dispose of excess plutonium, an ingredient in nuclear weapons, despite six years of negotiations.

The Russian view has been that American contractors involved in plutonium disposal should be held responsible for any accident. A plutonium accident could cause serious damage to Russian citizens, property and the environment.

Disposing of the Russian plutonium is a priority for the United States because of concern that terrorists might try to steal some. It takes only 17.5 pounds of it to make an atomic bomb, and Russia and United States each has more than 37.4 tons of surplus plutonium.

A senior Energy Department official, Linton Brooks, chief of the National Nuclear Security Administration, told Congress last month that both sides were close to reaching a compromise agreement on liability for the plutonium project.

In http://www.azcentral.com/

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J.  Comprehensive Test Ban Treaty

1.
Russian Deputy Proposes Revising Nuclear Test Moratorium
Interfax-AVN
4/12/2006
(for personal use only)


Russia should reexamine the need to observe the moratorium on nuclear tests, Sergei Beltsov, a State Duma deputy with the Liberal Democratic Party (LDPR), said on Wednesday.

"Russia continues to observe the universal nuclear test ban unilaterally. The U.S. does not recognize either the moratorium or the Kyoto Protocol, START II or the landmine agreement, or the International Criminal Tribunal," Beltsov told the Duma.

But the nuclear arsenal cannot be developed without testing. "Therefore, the issue of Russia's further adherence to the moratorium on nuclear tests should be entered on the State Duma's agenda," Beltsov said.

The parliament has yet to debate the proposal.

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K.  Official Statements

1.
PRESS CONFERENCE WITH STEPHEN RADEMAKER, ACTING ASSISTANT SECRETARY OF STATE FOR SECURITY AND NONPROLIFERATION ISSUES
Official Kremlin International News Broadcast
4/12/2006
(for personal use only)


Moderator: Good afternoon. Our guest today is Acting Assistant Secretary of State of the United States on International Security and Nonproliferation Issues, Mr. Stephen Rademaker. The topic is "The G-8 and Nonproliferation Issues." First, our guest will make some introductory remarks and then he will take your questions. We have about 30 minutes.

Rademaker: Good afternoon. I am in Moscow today for a series of meetings. Tomorrow I will be participating in a meeting hosted by the Foreign Ministry of the G-8 nonproliferation directors. And so, my counterparts from all of the G-8 members will be here for a day of discussions leading up to the St. Petersburg summit. Today I attended meetings at the Foreign Ministry with Anatoly Antonov, my Russian counterpart, and he and I had an extended discussion of the full range of bilateral arms control and nonproliferation issues that he and I handle.

And yesterday I met with Vladimir Kuchinov at Rosatom to talk about nuclear energy-related issues. I don't have an opening statement to deliver, so I think what I will do at this point is simply open it up to whatever question those of you in this room might have for me.

Q: What steps can the US Administration take and what steps can the international community take after Iran's announcement that it has implemented the first cycle of uranium enrichment? And what does the United States expect from elBaradei's visit to Teheran? And the second question. How much time will Iran need to build nuclear weapons? Are we taking about months or years?

Rademaker: First, let me say with regard to Iran's announcement yesterday that it was a deeply disappointing announcement. Please recall, that on March 29 the United Nations Security Council issued a presidential statement which read as follows: "The Security Council calls upon Iran to take the steps required by the IAEA Board of Governors and underlines in this regard the particular importance of reestablishing full and sustained suspension of all enrichment- related and reprocessing activities, including research and development." And Iran's response to this consensus statement issued by the Security Council was yesterday's announcement.

The language I just read was not a press release issued by the United States government or by any other government. It was a consensus statement agreed to by all the members of the UN Security Council, including Russia and China. And the fact that the regime in Iran would have so little regard for the clear view of the international community on such a sensitive matter is deeply troubling.

Obviously, I am not in a position to confirm what Iran has announced. But, as we have pointed out all along, enrichment technology is extremely sensitive. The capability to use centrifuges to enrich uranium to the level necessary to provide fuel for a nuclear reactor can also be used to enrich uranium to higher levels.

Iran assures us that they today are using 164 machine centrifuge cascade only to enrich to the level of 35 percent. But that same technology could be used by Iran to enrich to much higher levels, including to the levels necessary to produce weapons-grade uranium.

We've done calculations of what can be done with 164-machine cascade. If they chose to use such a cascade to produce highly enriched uranium, they could produce enough highly enriched uranium for a nuclear weapon in a little over 13 years, specifically 13.6 years is our calculation. But Iran has made it clear that it does not intend to stop at 164 machine cascade. Iran has told the International Atomic Energy Agency that its intention is to construct a 3000 machine cascade beginning next fall.

We calculate that a 3000 machine cascade could produce enough highly enriched uranium to produce a nuclear weapon in 271 days. And Iran is doing this work at the Natanz facility. Natanz is an underground facility that was constructed specifically to house centrifuges. The Natanz facility is constructed to house 50,000 centrifuges. And should they choose to fully utilize the space that they have constructed in Natanz for these 50,000 centrifuges, we calculate that using these 50,000 centrifuges, they could produce enough highly enriched uranium for a nuclear weapon in 16 days.

Now, we understand that IAEA safeguards are still in place in Iran and today, if Iran chose to use highly enriched uranium, the IAEA would probably detect that. But the ability of IAEA to detect this assumes that Iran remains subject to the safeguards agreement and remains at state party to the nuclear nonproliferation treaty.

And we already know one country, the DPRK which has announced its withdrawal from the nuclear nonproliferation treaty.

So I think the facts speak for themselves and it's obvious why all of us need to be concerned about the developments underway in Iran. So let us all hope that Iran listens more carefully to the request that it received from the United Nations Security Council and returns to full suspension of its enrichment-related activities.

Q: The current situation in Iraq is quite complex. Its economic state is complex. Some people say Iraq is on the verge of civil war. Don't you see this is the result of the United States' activities in the past three years? What do you think of the US policy in Iraq, its results?

Second, in this sense, cannot potential use of force in Iran lead to something similar, to similar results?

Rademaker: First, on your question about Iraq. Iraq is not within my area of responsibility and I did not come to Moscow to engage in discussions about Iraq. So, I think I will simply withhold any comment on the issue of Iraq.

With regard to Iran, there certainly has been no decision on the part of my government or any other government to use military force. To the contrary, I think it is obvious to everyone that we have been working very hard to achieve a diplomatic solution to the problem. We have been working for almost three years with the International Atomic Energy Agency to support and move forward the IAEA investigation of Iran's covert nuclear weapons program. And as that investigation moved forward and revealed additional facts about Iran's nuclear weapons program, we worked diligently within the IAEA Board of Governors to achieve political decisions about how to respond to Iran's violations of its safeguards obligations.

Those efforts culminated in the decision by the IAEA Board of Governors in February to report Iran's non-compliance with its safeguards obligations to the United Nations Security Council as provided for under Article 12c of the IAEA statute. And now the Security Council has taken up its obligations in working with the other members of the Security Council. Agreement was reached on March 29 on the presidential statement that I just read from a few minutes ago. That resolution -- I am sorry, that presidential statement calls upon Iran to comply with previous requests that it has received from the IAEA Board of Governors, including, most importantly, to suspend all enrichment-related and reprocessing activities. And it calls upon the Director General of the IAEA to provide a report to the Security Council on April 28 with regard to Iran's compliance with the requests set forth in the March 29 presidential statement.

So I think it's clear that we have been very much engaged in a diplomatic effort to solve the Iranian nuclear problem. This is an on-going effort and we will continue to work through the diplomatic process notwithstanding the kinds of announcements that were made by the authorities in Teheran yesterday.

Q: If everything goes in line with a negative scenario, what sanctions against Iran are possible? What are you going to do if those sanctions are not supported by Russia and China?

Rademaker: Your question contains a number of assumptions that I am not prepared to agree to. Your question assumes that Iran is going to continue to disregard the unanimous will of the United Nations Security Council. The presidential statement of March 29 was an exhortation. The Security Council could make that exhortation legally binding by adopting a resolution under Chapter 7 of the UN Charter. And certainly the question of sanctions would not be confronted until the Security Council had taken such a statement.

Your question further assumes that the Security Council has ordered Iran, under Chapter 7 of the UN Charter, to resume suspension of enrichment-related activities and that Iran will disregard or defy such a mandatory request.

And your question further assumes that if Iran defies a mandatory Security Council resolution that China and Russia will be prepared to acquiesce in that defiance. So, as I said, there are a number of assumptions here that I am not prepared to agree with.

Q: I wonder if you could give us a status report on American efforts to secure nuclear materials here in Russia. And let me know what is -- (inaudible) -- the problem that the Russians won't give America access to some sites where it wants to do security upgrades because they are in secret cities or otherwise sensitive places.

Rademaker: A complete response to your question would require a press conference devoted only to that issue. And I think there are other questions that reporters here have to ask, so, I will not provide a full and detailed to your question.

I'll give a summary answer. The United States today is spending a billion dollars a year on what we call threat reduction activities, primarily in Russia. And under the G-8 global partnership that was agreed at the Kananaskis summit of the G-8 in 2002, our G-8 partners committed to match that US contribution over the next ten years. So, the collective undertaking is to provide 20 billion dollars in funding over the next ten years: ten billion dollars from the United States and ten billion dollars from other members of the G-8 and a few countries beyond the G-8. We consider these programs to be very important and, frankly, central to our efforts to combat proliferation and provide for our international security.

One practical problem we encounter with these programs is that our Congress insists on a high degree of accountability for the billion dollars in funding that it provides every year. Our Congress wants to make sure that the money is not being stolen, that it is being properly spent and that we are buying a billion dollars worth of increased security every year.

Another practical problem on the Russian side is that there are facilities in Russia that for national security reasons Russia feels necessary to protect. And then there is a latent concern, I believe in Russia, that some of the efforts that we need to take for purposes of accountability are perceived as efforts to collect information and you can say perceived as espionage by Russian authorities.

So, one of the practical challenges in implementing these programs is to strike the balance between our need for accountability and Russia's need to be satisfied that its national security is being protected.

Q: International mediators are gathering in New York on the Palestinian issue. And you know that funding has been stopped already. Do you think there may be some changes after that meeting in the US policy because now the situation is getting very critical and it can result in a humanitarian disaster, 140,000 families are left without shelter.

Rademaker: Earlier I was asked about Iraq and I indicated that was not my area of responsibility and I did not qualified to comment and the same is true with regard to the Palestinian question. But I would be delighted to respond to any questions that might be asked about arms control and nonproliferation matters.

Moderator: Two more questions.

Q: Is the agenda of tomorrow's meeting known already? Are any documents going to be signed? And about the umbrella agreement on threat reduction which, I understand, expires soon. Is it going to be extended?

Rademaker: Tomorrow's meeting is one of the series of meetings to lay the groundwork for the St. Petersburg summit of the G-8. So, we will not be issuing a statement following tomorrow's meeting. The product of our work will be incorporated in the outcome of the St. Petersburg summit.

With regard to the CTR extension, as you probably know, we have had a difficult time wrestling with the issue of liability. But recently we have made progress in this area. And we do expect it will be possible to reach agreement on the CTR extension.

Q: Does the United States have nuclear weapons in Europe? And what are your thoughts in this connection and in connection with the current Iranian situation? And the second question, is there any concern inside the United States about the implementation by Russia of its commitment to reduce its tactical nuclear weapons in Europe?

Rademaker: Yes, the United States has a relatively small number of tactical nuclear weapons in Western Europe. Russia also has tactical nuclear weapons. As you know, the first President Bush and President Yeltsin adopted in parallel what are today called the presidential nuclear initiatives. These were parallel undertakings by the United States and Russia to reduce the level of nonategic nuclear weapons employed by each side. They did not reflect an arms control agreement, they reflected parallel unilateral undertakings.

The United States has fully implemented its undertakings under the presidential nuclear initiatives. And I am not aware of anyone in the Russian government or elsewhere who questions whether the United States has done so.

We believe that Russia has not completely fulfilled the Russian side of the presidential nuclear initiatives. The last time I was in this room was in October of 2004 and I was asked about this issue at that time. And I provided essentially the same answer then that I've just given.

My statements were reported in the press and the following day both the Foreign Ministry and the Ministry of Defense issued statements. Those statements affirm all of the steps Russia has taken to reduce its nonategic nuclear weapons. And for someone who did not read the statements carefully the impression might have been left that Russia was asserting in it it had fully implemented its presidential nuclear initiatives. But a more careful reading would make clear that Russia was not claiming to have fully implemented all of the undertakings made by President Yeltsin under presidential nuclear initiatives. And no Russian official with responsibility for this matter has ever claimed to me that Russia has fully implemented the presidential nuclear initiatives.

Certainly, there have been steps taken by Russia, very important steps, in the direction of fulfilling the presidential nuclear initiatives. But those steps fall short in certain key respects of full implementation. Nobody is going to ask me about this Foreign Affairs article?

Q: A question about this article. You have met with the representatives of Russian agencies. Did anyone express concern or make any observations on this article during these meetings? And does this article really reflect the direction in which the United States government is moving?

Rademaker: No Russian official has raised this article to me. And I think the reason for this is that Russian officials do not need the advice of American university professors in order to reach their own conclusions about Russian security requirements. I'll read one statement from this article which is manifestly untrue. And the article states: "The United States' nuclear forces have grown stronger since the end of the Cold War." And with that as their premise, the authors proceed to draw conclusions about the implications for Russian security. It is demonstrably untrue that the United States nuclear forces have not grown stronger since the end of the Cold War. I saw no mention in this article of the Moscow treaty, for example. Which is the 2002 treaty that provides for a two-thirds reduction in the number of strategic nuclear warheads deployed by the United States and Russia by the year 2012.

Under the previous arms control agreement, the START agreement, Russia and the United States were limited to 6,000 nuclear warheads each. Under the Moscow treaty each side has promised to reduce two a level of between 1,700 and 2,200 by the year 2012. By the time Moscow treaty reductions are fully implemented by 2012 our numbers indicate that the level of US strategic nuclear warheads will have been reduced from Cold War levels by 80 percent. That's the case with respect to strategic nuclear forces.

With respect to nonategic nuclear forces which we discussed a moment ago, the United States has fully implemented its undertakings under presidential nuclear initiatives. As a result, the United States today has reduced by 90 percent the number of non- strategic nuclear weapons that we deployed. So, how anyone can say that our forces are growing stronger in the face of a 80 percent reduction in strategic nuclear forces and a 90 percent reduction in nonategic nuclear forces remains to be explained to me.

This article identifies as a dangerous development the redeployment of nuclear warheads from our MX missiles to our Minuteman-3 missiles. And it is true that the warhead on an MX missile is a better warhead than the warheads previously deployed on Minuteman-3. But the reason this redeployment is taking place is because we have eliminated all of our Peacekeeper MX missiles. So, what this represents is a transfer of previously deployed warheads to a new missile in the context of a significant downsizing of our strategic nuclear force. Again, it is a mystery to me how anyone can see in this a threatening development.

The article assets that our Trident nuclear submarines now patrol more frequently in the Pacific Ocean, which is threatening to Russia. I cannot comment on where our nuclear submarines patrol, but I can point out that we used to deploy 16 Trident nuclear submarines and we are in the process of converting four of those to non-nuclear weapons roles. As of today, three of our Trident boats are no longer deployed nuclear missiles. And a fourth one was scheduled for that same conversion in the near future. In addition, we are reducing the number of nuclear warheads that we deploy on the missiles on the Trident submarines.

So, again, any evaluation of all of the facts points only to the conclusion that our Trident nuclear force is less threatening to Russia today than was true in the past. This article also assumes is doing absolutely nothing to enhance its own nuclear capabilities, which is not consistent with my understanding which derives from my reading of press releases issued by the Russian government. Russia is deploying new missiles, the Topol-M and conducting research and development on new types of warheads and new types of delivery systems. And an important point is, all of this activity on both the Russian side and the American side is being carried out in full compliance with our obligations under the START treaty and the Moscow treaty.

I think I've said enough.

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2.
Democrats' Radio Response
Fox News
4/8/2006
(for personal use only)


This is Congressman Steny Hoyer of Maryland. I am the House Democratic Whip.

On March 29th, House and Senate Democrats joined together to unveil a comprehensive national security agenda. We believe that our highest duty is to protect the American people, secure our homeland, strengthen our national security, and defend the Constitution of the United States. And, we are proud of our party's tradition of strong leadership in world affairs, from Wilson and Roosevelt, to Truman and Kennedy, and beyond.

These Democratic leaders demonstrated that defending America requires our nation to marshal the full range of its power - economic and moral, diplomatic and military - to fight for freedom, to foster democracy and respect for basic human rights, and to defeat tyranny and terrorism. We embrace their legacy, clear-eyed about what it takes to sustain and strengthen our national security.

Today, unfortunately, our nation and our people are not as safe as they could - and should - be. Too often, the Bush Administration and Republicans in Congress have failed to back up their rhetoric with robust action.

Consider the following: Nearly five years after we were struck on September 11th, our ports, chemical and nuclear plants, and mass transit systems are still vulnerable. We still have not implemented all of the recommendations of the bipartisan 9/11 Commission, which recently gave the administration and Congress a 'report card' filled with Fs, Ds, and incompletes. We still have not secured loose nuclear materials in Russia and elsewhere. In fact, the President's budget would cut funding for the Cooperative Threat Reduction Program - our flagship program to secure nuclear material around the world.

In addition, we are more dependent that ever on foreign oil; North Korea may possess more nuclear weapons than it did five years ago, and Iran is seeking a nuclear capacity; anti-Americanism is growing; and President Bush has refused to hold civilian leaders in his Administration accountable for their incompetence and miscalculations on Iraq.

The American people want and deserve a change of direction. To that end, Democrats are united: We will ensure our unparalleled military strength. We are committed to defeating terrorism and stopping the spread of weapons of mass destruction. We will implement the recommendations of the 9/11 Commission. And, we will work to make 2006 a year of significant transition in Iraq. We also will effectively prepare for natural disasters and epidemics. And, we will ensure that our nation becomes energy independent.

Finally, let me say that we can no longer ignore the dangerous deficits and exploding national debt, which has grown by $3 trillion over the last five years. Fiscal responsibility is a foundation for our national security. And, we cannot continue to borrow hundreds of billions of dollars every year from foreign countries such as China and Saudi Arabia. Democrats urge our Republican friends to join us in a bipartisan consensus to restore our nation's fiscal health.

Our thirty-fifth President - John F. Kennedy - had no illusions about the challenges that confronted our national security. Without question, he was committed to utilizing all of our nation's assets to strengthen our security and protect our people.

"The United States is a peaceful nation," he said. "And where our strength and determination are clear, our words need merely convey conviction, not belligerence. If we are strong, our strength will speak for itself. If we are weak, our words will be of no help."

The American people do not need more rhetoric. They need real security - real security provided by a comprehensive strategy that employs our military strength, intelligence capabilities, homeland defense, diplomacy, economic leverage and - most of all - the enduring power of our American ideals.

Thank you for listening. This is Congressman Steny Hoyer.

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3.
Countering WMD and Terrorism Through Security Cooperation
Stephen G. Rademaker
Federal News Service
4/6/2006
(for personal use only)


Remarks to Security Cooperation Strategy Conference, April 6-7, 2006, National Defense University:

Good morning. It is a pleasure to be here today to discuss how we are seeking to use security cooperation to reinforce our efforts to combat the risk of terrorist use of weapons of mass destruction (WMD).

WMD in the hands of terrorists would pose a grave security threat to the United States and our allies. We assess that it will be very difficult to deter terrorists from using WMD if they can lay their hands on such weapons. Therefore, if terrorists acquire weapons of mass destruction, we have to assume they will employ them, with potentially catastrophic effects. To help counter with this growing threat, President Bush released the "National Strategy to Combat Weapons of Mass Destruction" in December 2002. This strategy rests on three pillars: Counterproliferation to Combat WMD Use; Strengthened Nonproliferation to Combat WMD Proliferation; and Consequence Management to Respond to WMD Use. The national strategy recognizes that prevention will not always succeed, and therefore it places great emphasis on protection and counterproliferation, to deter, detect, defend against, and defeat WMD in the hands of our enemies. The strategy also focuses on consequence management, to reduce as much as possible the

potentially horrific consequences of WMD attacks at home or abroad.

Serving to integrate the three pillars of this strategy are four enabling functions that must be pursued on a priority basis: first, intelligence collection and analysis on WMD, delivery systems, and related technologies; second, research and development to improve our ability to respond to evolving threats; third, bilateral and multilateral cooperation; and fourth, targeted strategies against hostile states and terrorists.

This strategy applies to all weapons of mass destruction, including nuclear, radiological, chemical, and biological. We recognize, however, that biological weapons in the possession of terrorists would pose a uniquely grave threat to the safety and security of the United States and our allies. Bioterror attacks -- unlike other forms of WMD attack -- could mimic naturally occurring disease, potentially delaying recognition of an attack and creating uncertainty about whether an attack even occurred. In response to these challenges, President Bush outlined the elements of the U.S. biodefense program in a separate document entitled "Biodefense for the 21st Century," issued in April 2004. That program has three essential pillars: Threat Awareness, Prevention and Protection; Surveillance and Detection; and Response and Recovery.

Good strategies, however, must be effectively implemented by all government agencies in order to achieve the desired results. In this regard, it is important to underscore the unity of effort and purpose that exists between the Departments of State and Defense on the important mission of combating WMD terrorism. Last month, President Bush released the new National Security Strategy of the United States. This document made clear our determination to use all elements of national power to counter the threat posed by terrorists armed with WMD. The preferred approach is to convince our adversaries that they cannot achieve their goals with WMD, and thus deter and dissuade them from attempting to use or even acquire these weapons in the first place. With respect to terrorists, however, a comprehensive strategy also requires proactive counterproliferation efforts to defend against and defeat WMD before it is unleashed. Both the diplomatic and military instruments of national power must be brought to bear to

successfully prevent, protect against, and respond to the threat or use of weapons of mass destruction by terrorists. The Quadrennial Defense Review and the Secretary of State's new Transformational Diplomacy initiative both aim to build dynamic foreign partnerships and strengthen the capacity of our foreign partners.

Effective programs and policies are essential to these efforts. Let me briefly outline for you a few of our recent successes, and then explain why we believe partner capacity building is a critical tool in combating WMD terrorism.

The Bush administration has stressed the importance of security cooperation to preventing the proliferation of weapons of mass destruction. U.S. assistance under Nunn-Lugar and related programs to eliminate weapons and prevent their proliferation has been funded at record levels. Moreover, with the formation in 2002 of the G-8 Global Partnership Against the Spread of Weapons and Materials of Mass Destruction, the United States has persuaded our foreign partners to join us in financing these activities. The G-8 Global Partnership is a prime example of the use of effective multilateralism to combat WMD proliferation. Other efforts to address proliferation threats worldwide include the Global Threat Reduction Initiative to reduce fissile and radioactive material worldwide, and the Second Line of Defense and Megaports programs to install radiation detection capability at major seaports, airports, and border crossings.

The United States spearheaded efforts to persuade the United Nations Security Council to become more active in combating WMD proliferation. A major milestone was the adoption of UN Security Council Resolution 1540 in April 2004. In adopting Resolution 1540, the Security Council -- for only the second time since its creation -- invoked its Chapter VII authorities to require nations to take steps in response to a general, rather than a specific, threat to international peace and security. In particular, Resolution 1540 requires all states to criminalize WMD proliferation, institute effective export controls, and enhance security for nuclear material.

Another important multilateral effort of the Bush Administration to combat weapons of mass destruction is the Proliferation Security Initiative, or PSI. PSI highlights the close interaction among nonproliferation, counterproliferation, and intelligence. PSI countries have put their diplomatic, military, law enforcement and intelligence assets to work in a multinational, yet flexible, fashion. We and our PSI partners are applying laws already on the books in innovative ways and cooperating as never before to interdict shipments, to disrupt proliferation networks, and to hold accountable the front companies that support them. PSI has now expanded to more than 70 countries, and continues to grow. PSI is not a treaty-based organization, but rather is an active security cooperation partnership to deter, disrupt and prevent WMD proliferation.

The United States is also working with foreign partners to build national and international capacities for Combating WMD Terrorism. Building and strengthening the capacity of international partners to combat WMD terrorism is a new framework for security cooperation. We are developing plans for building a layered defense in depth to prevent, protect against, and respond to the threat or use of weapons of mass destruction by terrorists. For example, we are developing model bilateral information sharing agreements in the areas of nuclear detection, bio-surveillance, and consequence management. These agreements, to be implemented on a voluntary basis, are designed to provide reach back support in the event of a WMD terrorism attack and save valuable hours in government-to-government coordination -- time that could potentially save thousands of lives. We are also working on such partner capacity building initiatives as development of a web-based WMD terrorist experts network, and creating a nuclear terrorism

campaign within the State Department's "Rewards for Justice Campaign" that would offer financial rewards to those who turn in terrorists planning acts of nuclear terrorism. Increased information sharing among partner nations will assist partner nations in identification of key domestic, or international, gaps or vulnerabilities that could be detected and then exploited by WMD terrorists. Once these gaps or vulnerabilities are identified, partner nations can work to strengthen the layered defense in depth by taking remedial action.

The threat of nuclear terrorism is one of the most dangerous international security challenges we face today. Terrorist acts involving nuclear materials, radioactive substances, or nuclear facilities could bring catastrophic harm to the United States and other members of the international community. In recognition of the seriousness of this threat, we are always looking for new ways to work with other willing partner nations to combat this growing threat around the globe.

Multilateral cooperation among partner nations in order to build a layered defense in depth is the hallmark of our approach. We believe that this innovative and dynamic approach to security cooperation in combating WMD terrorism will prove to be broader, deeper, more flexible, and more effective than the traditional tools of nonproliferation diplomacy alone. Thank-you for your attention, and I look forward to responding to your questions.

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4.
HEARING OF THE ENERGY AND WATER SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE APPROPRIATIONS FOR THE NATIONAL NUCLEAR SECURITY ADMINISTRATION
Federal News Service
4/6/2006
(for personal use only)


SEN. DOMENICI: (Sounds gavel.) This hearing will please come to order. Thank you very much.

Today the subcommittee is going to hear testimony on FY '07 budget request for the National Nuclear Security Administration. I'd like to thank Ambassador Brooks for joining us here today and providing his testimony.

The ambassador is joined by Jerry Paul, the principal deputy administrator for nuclear nonproliferation activities -- is that correct? -- and Tom D'Agostino, deputy administrator for defense programs; and Admiral Kirkland Donald, deputy administrator for naval reactors. I appreciate everyone's participation, and thank you for coming.

Ambassador Brooks will provide the testimony, and his three deputies will be available to answer questions. I understand that's our format.

The president's request for NNSA for '07 is 9.3 billion (dollars), up 211 million (dollars) from last year's enacted level. Weapons programs -- the funding for the weapons programs is 6.4 billion (dollars), up about 38 million (dollars). In large measure this budget supports the necessary investments in lab infrastructure. However, I'm concerned with the declining trend in science-based stockpile stewardship activities such as science, engineering and internal confinement fusion.

I couldn't be more disappointed in what your department has proposed for inertial confinement fusion budget. The department continues to put all their resources behind the NIF project at the expense of all the other stockpile activities. Funding for NIF research is up over 50 million (dollars), while the other high energy density research has been cut by 150 million (dollars). The NIF at- all-costs attitude is now undermining the weapons stewardship research activities. Declining budgets for non-NIF-related science and weapons physics research on Z and omega clearly at risk.

Mr. Ambassador, I believe this strategy is not the right one, and we're going to work hard to correct it here in the Senate energy and water bill, and we hope that the product that we're finished with will meet with your satisfaction. It will be different than that which you submitted to us.

On Monday, Tom D'Agostino briefed me -- and I thank him for that -- on the NASA's -- on NNSA's plan to implement the nuclear complex of the future. The department has developed a plan to consolidate operations in fewer locations, which should reduce security costs and reduce the overall number of facilities that NNSA must maintain out in the future, perhaps to 2030.

In addition, it supports the Reliable Replacement Warhead program, and begins to catch up on the dismantlement of weapons no longer in the stockpile. That's good.

What I believe is missing from the plan is a decrease in the overall number of weapons systems in the NNSA that they're going to be expected to maintain. Under the plan, the NNSA will continue to support the same eight systems plus the new RRW through 2030, if I understand that correctly. It seems to me that you've traded off facilities, science and people in exchange for the same number of systems and responsibilities. I'm not sure that I got that figured right, but it looks like it. And I'm not sure that makes the best sense overall.

Why doesn't this plan contemplate reduction in the existing systems, perhaps the elimination of one of them? Many experts wonder why we continue to maintain the W80. Maybe it's time to revisit the need for the life extension of that weapon; we'll see.

Nuclear nonproliferation is the next issue. And the budget continues to receive strong support from the president; that's good news. Funding for the nonproliferation activities are up 111 million (dollars), for a total 1.73 billion (dollars). Funding for MOX, the Global Threat Reduction Initiative and the NPCA all received increases. I think that's good news.

One notable exception is the funding cut for nuclear detection R&D program. This activity supports research. It gives our national security teams the technical advantage over terrorist countries that attempt to conceal their nuclear programs. We'll ask about that, why that should have been reduced or eliminated.

In 1998, I worked very hard with a few others to provide $200 million to encourage the Russians to come to the negotiating table on plutonium disposition -- 1998. The funding was in good faith, and the offer to the Russians to demonstrate our sincerity and seriousness about nonproliferation.

The Department of Energy and the State -- Department of State have secured $800 million from G-8 partners to construct the Russian MOX plant, a big achievement. However, I understand the Russians have raised the stakes, and are now demanding that the G-8 pay for the plant operations. I think we're correct in that. We'll -- you'll have to talk about that, Mr. Ambassador. Very -- a matter of high, high importance. Unless we allow them to use the plutonium for their fast breeder program, they insist that we're going to have to pay for plant operations.

Now, I'm concerned that these fast reactors could be turned into breeder reactors and would create additional plutonium, the very substance we're trying to eliminate. We also continue to wait for the final approval of the Russians; that is, their full governmental (governance ?) making on the liability deal negotiated last July. I feel that the opponents of MOX will use these delays as an excuse to cut funding for this project.

The Russian delaying tactics have created a liability for the U.S. program, in my opinion. I believe we should de-link the construction projects and allow the U.S. efforts to go forward to create a disposal pathway for our weapon-grade plutonium. We must live up to our commitments of reducing our stockpile even if the Russians will not, or if for some reason they think they must continue to delay this matter as I have described it, or for other reasons.

In the meantime, we should continue to talk and try to work things out with the Russians, try to get an agreement prior to or during the G-8 meeting. That's up to our two great countries. That will take place this summer.

But until we have final agreement that will guarantee the destruction of the 34 tons of Russian weapons-grade plutonium, the U.S. should not fund the Russian construction project, and we must not provide any further design on the MOX plant for the Russians, in my opinion.

And my last observation has to do, Mr. Ambassador, with the cost of operations of LANL. In two months, Los Alamos National Security LLC will take over the M&O contract at Los Alamos from the University of California, which has operated the facility for 60 years.

I'm concerned about the increased cost of the new contract negotiated by NNSA. I'm not saying I'm concerned in the sense it should not have happened, but I'm concerned that the new contract provides significant increases in the fee, from roughly $8 million to $80 million, and will require the lab to pay the gross receipts tax to the state of New Mexico of about $75 million; I think that's the estimate. I suspect that there are operations, several other increases, that add to the bottom-line operations because of the new contract; I don't know that.

Unfortunately, the Los Alamos Lab budget doesn't reflect any increases to accommodate these added charges.

All of these costs will come out of R&D, science and operational accounts, putting further strain on an already tight budget. I hope to get some answers from you, Mr. Ambassador, as to how these costs will be offset without having a negative impact on lab operations. I know what the answer is going to be: there will be savings made here and there and elsewhere. That may be the case. But clearly that isn't going to go on forever, and we're going to have some assurance that in the future we've got to make this up in other ways that to continue to assume it will come out of savings.

I will close now by saying how I remain impressed with the success at the Naval Reactor program. I save it for last because it's best, and because it doesn't take very long to explain it; to just say that the Navy needs nuclear propulsion plants that are capable of responding to challenges that we face, and we believe this program accomplishes these goals. The five-year plan includes a small but a steady increase in the naval reactors, which will prove beneficial in the common months.

Now I'll ask if there are any others who want to make opening remarks. If there are any opening remarks that are needed to be put in the record, we'll provide for that now, without objection.

Now having completed that, we will move to the witness. Mr. Ambassador, sorry I took so long, but I think you know how I feel on a few of these subjects now. So you may proceed as you see fit.

MR. BROOKS: Thank you, sir.

I have submitted a statement which I'd like received for the record.

The president's budget supports three main missions: safe, secure and reliable stockpile; reducing the nonproliferation threat; and providing reliable and safe nuclear propulsion systems for the Navy. Most of our programs are similar to previous years, are familiar to the committee, and are described in my written statement. So I want to limit my opening remarks to drawing your attention to a couple of points.

First, as you noted, sir, all of the stockpile remains safe and reliable today. We must ensure reliability and safety over the long term, and this means transforming the stockpile and the supporting infrastructure.

Our approach to doing so depends heavily on the concept of a Reliable Replacement Warhead, taking advantage of our decision to relax Cold War design constraints. We believe we'll be able to then to design replacement components that are easier to manufacture, safer, use environmentally more benign material and increase performance margins.

I share your concern about the number of weapons systems. The Department and Defense and we are working together closely. The question is not will we still be maintaining eight systems is 2030; the answer is almost certainly no. The question is, how far along do we have to go in this new effort before the military can have confidence? Our assumption for the long-term future demands, frankly, there be a reduction in the life extension programs. Otherwise the resources for modernizing the complex are going to be very difficult to find.

We have completed, as you know, and as you have been briefed, intensive effort to sustain and establish our vision for the future, and I am quite pleased with that. Our challenge, as you know, has been to find a path that is both affordable and feasible, but lets us continue to support the near-term stockpile.

I want to make two other points about the weapons program. Last year the Congress reduced life-extension programs, and those reductions challenge our ability to meet DOD requirements. And I'm especially concerned with the reductions of the W76 submarine-launched ballistic missile warhead and, assuming that it is retained, the W80 cruise missile warhead.

Also last year, the Congress significantly reduced funds for the Facilities and Infrastructure Recapitalization Program. That has made it impossible to meet the congressionally mandated date of 2011 to terminate this program, and the administration has submitted legislation to extend the effort two years.

I hope that the Congress this year will support the president's request in both those areas.

Turning to nonproliferation, I'd like to highlight three areas.

First, we are on track to meet the various commitments agreed to between President Bush and President Putin at Bratislava in 2008. We'll complete security upgrades in Russia by that date.

Second, we are requesting significant funding to permanently increase -- to permanently shut down the three remaining weapons-grade plutonium production reactors in Russia. We're also proposing a significant increase for the Global Threat Reduction Initiative, which secures both fissionable and radioactive material.

And finally, as you noted, under the Plutonium Disposition Program, we expect to begin construction of the MOX fuel fabrication facility this fall. An approval of the entire administration request is, in my judgment, crucial because we will be seeing the peak funding construction year in '07.

I'd also like to turn two points that you made in your opening statement and respond briefly to them, and then we can respond further in questions.

With respect to nonproliferation research and development, our request this year is almost identical to our request last year. Last year, the Congress increased funding. We did not take that as intended to be direction to alter our long-term base. And so it's not a question of cutting that program; it's a question of assuming that that was a one-time increase.

Secondly, with regard to Los Alamos, I share your concern that we make sure that the American taxpayers and the program are not put at risk by the change we've made at Los Alamos. Over the next seven years, we could potentially spend almost half a billion years in fee at Los Alamos, and I intend to get something for it.

First, 70 percent of that fee will be performance-based, and we won't spend it unless the performance warrants it. And performance very much includes efficiencies and improvements that will free up resources. As you know, when the lab director decided to shut the facility down, you can argue about the bookkeeping, but we probably spent several hundred million dollars. If we can guarantee that never happens again, we will, in fact, have more money to go into the program.

I'm also pleased that the new contractor has proposed a decreasing fee that starts at 70 million (dollars) a year and drops in the seventh year to a maximum of 54 (million dollars). That's still a lot of money, but it is an indication that they believe that their task will be greatest in the early years.

Finally, as you noted, the naval reactors effort, which has always been a model for performance efficiency, is the final segment of our budget. Our request supports our number one priority of ensuring safety and reliability of 104 operating Navy nuclear propulsion plants, and it also continues research on advanced technology.

Mr. Chairman, our budget request continues to transform the stockpile, continues to transform the infrastructure, continues to reduce the global danger from proliferation, and continues to enhance Navy force protection capabilities, and I urge the committee to support it.

And with that, sir, I'm ready for your questions.

SEN. DOMENICI: Thank you very much. (Pause.)

Can we talk first about MOX?

MR. BROOKS: Yes, sir.

SEN. DOMENICI: First, I'm surprised by the lack of detail in your statement regarding MOX. Your statement makes no mention of the fact that the department is re-baselining the entire program, and the cost estimates have increased to over $3 billion; makes no mention of the steps the department is taking to respond to the DOE IG report, which found that we lack sufficient contractor oversight, which has contributed to increased costs.

It also fails to mention that the Russians have made it clear that they will no longer pay for the operations of MOX if they are limited to using the fuel in light-water reactors. In the same manner as the U.S., apparently, the Russians have made the unilateral decision that their only interest is in fast reactors.

And finally, I'm becoming increasingly frustrated that the Russians continue to stall the final approval of the liability agreement. I believe they are now -- the Russians are now the biggest liability facing the program and we should sever the link between the construction projects.

So I have questions.

Since your statement fails to mention any of these issues, could you update the committee on them? And what are you doing to improve the contract oversight and to rein in the contractor?

MR. BROOKS: Certainly, sir. Let me start with the Russian program first.

Every Russian official at every level continues to assure us that the holdup in giving final approval to the liability agreement is entirely procedural. I am -- I share your frustration. I will note, however, that the Russian bureaucracy is legendary for taking a long time to do even simple things. So the information we have as recently as two weeks ago is an assurance from very senior Russians that there is no issue.

Second, the Russians have made it clear that they will dispose of plutonium in light-water reactors as we have envisioned if the entire cost is borne by the international community. The Russians have interpreted the 2000 agreement as suggesting that; I believe the United States does not interpret it. In any event, both the State Department and the Russians and I believe that we are unlikely to raise all of the operating money from the international community.

Therefore, to preserve our options going in both directions, we are working with the Russians on disposing of some fuel in a(n) existing fast reactor called the BN-600. BN-600 was envisioned in 2000 as one method for disposition. It is not a new idea. It is new that it is seen as a primary approach. Part of this effort would be to remove the blanket that makes it a breeder and to do that in a way that is verifiable to the United States. I share your view that it would be lunacy to use surplus plutonium in order to make more plutonium, and I do not believe the Russians have any interest in that, and we would certainly agree to it.

That would then allow a potential path. BN-600 cannot eliminate all the 34 tons of MOX in any reasonable time. It would simply prove the technology and allow a Russian planned reactor called the BN-800, not yet built, to be a path to disposition. So we intend to work with the Russians to continue to ensure that they live up their end of the agreement.

At the same time, I no longer believe that holding up U.S. construction is in our interest. I believe that because of the need to meet our own obligations, and the relationship between a credible disposition path and material consolidation, that construction should go forward in South Carolina.

With regard to the General Accounting Office and the cost increase, there are three reasons for the cost increase.

One reason is that the initial figures we gave the Congress in 2002 were in constant '01 dollars and we're now looking at out-year dollars.

Second reason is that the initial figures we gave the Congress were based on an erroneous, as it turns out, belief that we would have an optimal funding profile, and that's not proved feasible. As a result, our strategy now is to fund at a constant rate, so it is probable that the '08 request will be very similar to the '07 request. That's more efficient from the standpoint of orderly budgeting; it's less efficient from the standpoint of construction. So there is an increase.

And then, as you correctly noted, we have had some management problems. Some of them have been caused by the protracted delay. Some of them have been caused by reductions -- understandable reductions -- based on the Russian delay. We're renegotiating the contract with DCS, the contractor. We decided to renegotiate rather than having to recompete because I believe it's important to get on with it. We will have a 100 percent incentive fee, we will have stronger accountability, and we will have new contractor management. And I believe that these steps will, in fact, give us greater assurance -- I don't want to over promise, Mr. Chairman; the department's record on large-scale construction projects is not one of the things to be hugely proud of -- but I believe that we are now on top of this and that we will be able to go forward in a responsible manner.

SEN. DOMENICI: Maybe this is not a question for you, but let's just talk about this anyway. Why are we doing these things we're doing for the Russians? We started this program -- these programs -- the first at the time was Nunn-Lugar, and it took three, four, five years for it to get operating. It's about 20 years old. At that point we had lots of potential proliferation around, and the Russians had no money, and things were really going to hell in a handbag.

And it was hard at first for Americans to get the idea that we ought to give them help, but we did, and we got into this in a big way. And we got three major programs that we call nonproliferation in the world, and almost all the money goes to something that's Russian, including the safeguard program. That's still going in, isn't it, the one where we make sure things are guarded properly and --

MR. BROOKS: Yes, sir. Yes, sir.

SEN. DOMENICI: That's American money to safeguard things over there.

MR. BROOKS: Yes, sir.

SEN. DOMENICI: The reason I say I don't know whether it's for you to answer -- why do we still do these things for Russia? Why don't they do themselves?

MR. BROOKS: Well, increasingly they are, sir, and I agree. First --

SEN. DOMENICI: Wait a minute. You agree with what?

MR. BROOKS: I agree with your view that -- what I take to be your view -- that it is increasingly for them to bear the burden of doing their own efforts. We support improving security in Russian nuclear material for the same reason we did when you and others started it -- because we believe that it's the way you protect the United States.

SEN. DOMENICI: Absolutely.

MR. BROOKS: That the best way to keep nuclear material out of the hands of those who would do us harm is at the source.

At the same time we're coming to end of that phase, and the president and President Putin have explicitly stated at Bratislava they want to see us move from assistance to partnership. We're going to finish our work in improving Russian security in 2008. In fact, the Russians have already picked up a substantial -- some of the sites that when I sat before you last year I expected we would be doing the Russians are now going to be doing. And we are shifting our effort to much more of a collaborative understanding of sharing best practices, of working on how we make sure that they sustain this effort.

So I think that, although perhaps less rapidly than might like, we are moving away from sending money there.

SEN. DOMENICI: Well, I appreciate your answer, and I wouldn't -- haven't been back to Russia since we started this a long time ago. It was all different people and a completely different government, so I don't know how they feel or what they think about this dialogue here today.

But this whole business of MOX and plutonium disposition and the 34 tons that made a deal on, made an agreement on, it's incredible to me that the money, America there ready to pay for all this, it has taken us so long to get something done that it would appear to me is in their benefit as much as ours or more, and we're having so much trouble getting it done.

That's why I'm pleased to here you say that we ought to -- you didn't use my language, "de-link," because that's too strong a word, but you indicated we should proceed if I heard you right.

MR. BROOKS: Yes, sir. Yes, sir, you did hear it right.

SEN. DOMENICI: You can rest assured in the appropriations process, to the extent that we can have anything to do with that, that's what we're going to say. It's a long -- we're waiting long enough. America has a rare chance to make a breakthrough with MOX that we waited 25 years to do and should have done, and we just as well get on with it.

I think the state that has agreed to take it has -- at least has some empathy -- deserves some empathy, too. They can't sit around forever and wait either. Maybe others don't understand that, but we do.

MR. BROOKS: Thank you, sir.

SEN. DOMENICI: It's a tough problem.

So we understand each other on MOX and on plutonium disposition. The one I've described is what we're going to do, and you can decide as this legislation moves through what the administration's position is going to be.

MR. BROOKS: Yes, sir.

SEN. DOMENICI: All right.

The NIF budget.

Does the FY '07 budget support the administration's goal of ignition by 2010?

MR. BROOKS: Yes, sir, it does.

SEN. DOMENICI: Do you agree with the JASON report on the NIF ignition plan that it was fair and an accurate program of the NIF program?

MR. BROOKS: It was, and what it said was that they agree that we would be able to conduct the ignition experiment on 2010. They are less confident whether the first experiment will work, and we share that view. I mean, this is something that's never been done before. But we were pleased to see the JASON's report support the basic notion that the program is on track to conduct an initial experiment in 2010, and we intend to keep it on track.

SEN. DOMENICI: Well, they say that JASON report, which you believe to be an accurate report, stated that 2010 ignition was, quote, "unrealistic." If this top-caliber review believes this goal is unrealistic, then why should we support a budget request that makes deep cuts in all these other programs to support this program, that says it's unrealistic to expect the 2010 ignition?

MR. BROOKS: Respectfully, sir, what they said was that it was realistic to assume that we could meet our goal to conduct the experiment in 2010, that it what was not clear -- if you say they used the word "unrealistic," I accept that; I don't remember when I read the report -- that it was not clear to whether the first experiment would succeed.

And I will say it is unrealistic to assume that the first time you try anything that's never been done before that you can guarantee it's going to work. I don't want to suggest that I'm promising the committee that we will achieve ignition on the first try. I believe that we will conduct an experiment in 2010. I believe we have a chance that it will work. But they call it research because we haven't done it yet.

And so I do think that the decisions we've made, although I think that we will try to start shifting some resources as we get through this peak period in the NIF, I think we'll try to shift some resources back to using some of the other tools in inertial combined infusion. For example, the Z Refurbishment Project will be complete in fiscal '07. And I think that we did in fact reduce the amount of money that went into some of the other valuable areas like Z and Omega.

SEN. DOMENICI: Well, the people at NIF know where this senator stands. And I stand by watching and waiting and hoping that it works. It is one of the biggest gambles I've ever voted for. And looking back on it, while I take great pride in saying I really love big science, that's one I would like to go back at and see whether my arms would fit around it again. I'm not quite sure they would. But, having said that, I see another senator here. And I have lots of questions, but he doesn't have as many as me nor as much time.

Did you have questions at this point?

SEN. ALLARD: Well, I do, Mr. Chairman, and thank you. Thank you for holding this hearing today. I do have a full statement I'd like to make a part of the record.

SEN. DOMENICI: It'll be made a part of the record.

SEN. ALLARD: I have a news release here where a D'Agostino prepared a statement, I guess, yesterday in the House on laying out the future of the Nuclear Weapons Complex. I'm wondering if maybe you might go into it. As you know, I'm interested in that.

MR. BROOKS: Yes, sir.

SEN. ALLARD: And I wonder if you might go into a little more detail than what I've seen here.

MR. BROOKS: Certainly, sir.

SEN. ALLARD: I see he's here, which -- whoever wants to do it.

MR. BROOKS: Well, I'll -- let me --

SEN. ALLARD: Okay. Well, we can have -- whatever.

MR. BROOKS: Let me try, and then --

SEN. ALLARD: Sure.

MR. BROOKS: We have pretty much all the knowledge we've got in this room, so we can tell you where we're going.

We have, for the last couple of years, been looking at the question of the complex of the future. We had an external look done by the Secretary of Energy Advisory Board to receive the report of last year. That external look recommended moving very quickly to a single site for everything that involves uranium and plutonium at a location yet to be determined and made a number of other recommendations, many of which we have adopted.

Our approach to the future complex has a number of parts. First, we intend to continue to emphasize the development of a reliable replacement warhead, because if we can simplify the ability to maintain and improve warheads, then any complex can be made more efficient. So we see that as good in itself, but also as an enabler for the improved complex.

Secondly, we believe that one of our weaknesses today, which we don't need to wait for the future, is that the complex does not function in an integrated manner. And so Deputy Administrator D'Agostino has already put out guidance to make our incentive package for each of the sites, based in part on the ability of the whole complex to meet its requirements.

Third, we think that we should dramatically reduce the number of places where we do plutonium and uranium, both for efficiency but in order to reduce the cost of security. For uranium, we believe that the investments we are making and have planned at Y-12 make it the long-term highly-enriched uranium center for the United States.

We're building a facility called the Highly Enriched Uranium Material Facility, which will be the storage facility -- the Fort Knox of uranium, if you wish -- and we will be working with the Congress in coming years to build a facility next to it where all the uranium processing work is done.

And putting these two facilities next to each other will do two things. It will dramatically reduce the number of buildings that actually have material in it, and it'll dramatically shrink the area that we have to guard and protect.

With regard to plutonium, we believe that we should consolidate by the early 2020s essentially all plutonium work, both in making pits and in doing research on plutonium, at a single facility. And until that facility exists, the capability at Los Alamos will provide the interim capability.

We believe that the long-term future of the weapons labs -- and we don't know where that plutonium facility should go, but our general view is it should go at an existing site that uses category one, category two material. We don't think it's particularly worth the physical and political cost of moving plutonium to places where it's never been.

As a result, we intend to, over time, eliminate having special nuclear material at the three weapons laboratories. Sandia, which has the Sandia pulse reactor as the primary material, will finish the last series of experiments on that reactor later this year, and we'll be in a position to make Sandia special nuclear material-free.

We expect to begin moving material out of Livermore in 2008. I'd like to be a little fuzzy right now about where we're going to put it, but we're going to begin moving it and intend to have Livermore free of special nuclear material by 2012. One precursor to that is obviously we want both Los Alamos and Livermore to continue to have intellectual involvement in plutonium metallurgy, which is so crucial to the stockpile. And we're going to have to work arrangements so that can be done from a single consolidated site.

And ultimately, if Los Alamos does not become the site of the new plutonium center, we would much later move out of Los Alamos. We intend to create a new non-nuclear production facility by 2012. Our facility in Kansas City is one of our best-run and best-managed facilities, but it's still operated as a government-owned, contractor- operated facility.

It still has 3 million square feet of floor space. And the United States doesn't need that, and so we intend to move toward a different kind of facility. We still believe that there are things that need to be made under direct contract to us that not all non- nuclear components can you simply go out and procure, but we want to move to more commercial procurement where that's appropriate.

We intend to make it clear to the Congress and the American people and the world that this is not the start of some new arms race. By accelerating the rate at which we dismantle weapons between '06 and '07, we will have a 50 percent increase in dismantlement. And we're still looking at what we can do in the years following that.

Finally, we intend to look -- with regard primarily to the laboratory complex, we believe that we should retain the three existing laboratories. We believe that we should work more diligently than we have to look at the one-of-a-kind facilities as user facilities that truly support the entire complex. We also think that over time the more complex high-explosive experiments should be centralized in Nevada.

And then, finally, we have recently -- inspired, to be candid, by some outside looks -- we have concluded that any kind of complex, we've gotten too risk-averse. We've emphasized fourth-decimal-point analyses of safety over the expense of getting things done. And so we're in the process of a series of internal looks to make sure that, whatever the complex of the future is, it'll be operated more efficiently.

So that's the broad approach. There are a number of things in this budget that will contribute to that approach, but we will obviously be working with the Congress in the coming years, most particularly as we start the process of making site selection for this consolidated plutonium center.

SEN. ALLARD: You're thinking the disposal site would be at Yucca Mountain in Nevada?

MR. BROOKS: I'm assuming, at the moment, that the complex makes -- we make two assumptions. One is that, with regard to plutonium disposition, that it will lead the weapon system, if you will, through Savannah River. And in terms of high-level disposal, that's not our formal responsibility, but we are obviously assuming that Yucca is where -- for example, I believe that almost certainly we will continue to decide we have too much plutonium, and I believe that we will turn more and more of it into MOX fuel, and that will go into commercial reactors. And the output of that is just like the output of any other commercial reactor. And, you know, at the moment, Yucca is where that's slated to go.

SEN. ALLARD: Yeah.

MR. BROOKS: But there's relatively little that goes directly from the weapons program into Yucca.

SEN. ALLARD: Yeah. You're passing through the MOX facility --

MR. BROOKS: Yes, sir.

SEN. ALLARD: -- which right now we have at Savannah River.

MR. BROOKS: Yes, sir.

SEN. ALLARD: And that is also used to reprocess spent reactor rods.

MR. BROOKS: Well, the MOX facility doesn't at the moment.

SEN. ALLARD: It doesn't?

MR. BROOKS: No, sir.

SEN. ALLARD: Okay, but it has the capability to do that?

MR. BROOKS: No, sir.

SEN. ALLARD: We'd have to build another facility to do that?

MR. BROOKS: Yes. The department -- and I want to distinguish between things for which I have responsibility, and so I don't want to --

SEN. ALLARD: Okay.

MR. BROOKS: The department, as part of the Global Nuclear Energy Initiative, will be recommending -- has recommended that we move to the construction of some demonstration facilities for both reprocessing and for an advanced burner reactor. We don't have sites located for that, and they are not in the NNSA area of responsibility.

SEN. ALLARD: And those sites would be the MOX plus. Is that correct?

MR. BROOKS: I think that it is probably a better way to think of them as really sort of separate issues.

SEN. ALLARD: Okay.

MR. BROOKS: The time scales are different. The principle is different. And we looked at whether or not we should somehow combine all of this in one galactic program and decided we should not.

SEN. ALLARD: So, moving on then, if we should get in, we're going to have more nuclear power plants; we're going to decide to reprocess those rods. You're thinking of a separate facility altogether.

MR. BROOKS: Yes, sir, unrelated to --

SEN. ALLARD: And then, in that process, you use -- if I say the plus (MOX ?), you know what I'm talking about.

MR. BROOKS: Yes, sir.

SEN. ALLARD: I don't know what your official technology is there, but it's an enhanced reprocessing.

MR. BROOKS: Yes, sir. The vision that we have now -- when I say we, I don't mean NNSA; I mean the administration generally -- for the future of nuclear power has a number of components, but it is based on the belief that we should not plan to put one through fuel in a geologic repository, because, A, you're going to use up all the space available, and B, you are, in fact, putting a lot of energy content there. And finally, you're putting a huge amount of stuff with very long half-lives, which means that you have to analyze for periods that are probably beyond our capability.

And so the idea is that we would take the fuel that comes out of traditional light water reactors, we would reprocess that through a new approach not previously used, that will give us a transuranic fuel, if you will, a fuel that is plutonium plus other transuranic isotopes, and that that fuel will go into fast reactors.

What this will do for you is, what ultimately -- those still, sooner or later, are going to be stuffed into some geologic repository, but the volume will be reduced substantially and the peak dose period will be reduced substantially, and you'll get more of the energy content out of the fuel.

If you do that, then what you have to do is guard against any question that you're harming our traditional nonproliferation approach, which is one of the reasons the United States has been skeptical of reprocessing in the past.

Our approach is to reprocess in a way that is different from traditional reprocessing and that makes the fuel less interesting -- I don't want to say uninteresting, but less interesting from proliferation -- but then also to create a global regime of essentially fuel leasing. That's not exactly the term we used, but where only a limited number of states would do this reprocessing, and those are states with traditional strong safeguards.

And so what we think all this will do is it will allow us to meet the future energy needs through nonpolluting nuclear power. It will allow us to do that in a way that doesn't require small countries to bear all the burden of disposal, because large countries would send them fuel and then take it back for reprocessing, and that would not put us in the situation where we are now where, depending on your projections of future nuclear power, we need nine more Yucca Mountains this century, which I think most of us believe are not likely to be easy to find.

SEN. ALLARD: Thank you, Mr. Chairman. And his response took longer than I anticipated.

MR. BROOKS: My apologies.

SEN. ALLARD: I figured you'd be interested in it, so I didn't try and cut his response short. So thank you.

SEN. DOMENICI: That's all right. I was interested.

SEN. ALLARD: I figured you should share some interest in it.

SEN. DOMENICI: I already knew about it, but I was interested.

SEN. ALLARD: (Laughs.) I hope I didn't duplicate a previous question you asked.

SEN. DOMENICI: No, no. I think the new word that we're all trying to use is recycling.

SEN. ALLARD: Yes.

SEN. DOMENICI: Recycles instead of reprocessing.

SEN. ALLARD: That's correct.

SEN. DOMENICI: That's the words.

SEN. ALLARD: It's an enhanced recycling process.

SEN. DOMENICI: Yes, recycling. And in the process, we're going to use -- it has not been used before in a full scale.

That's why this process is pretty risky, because it's going to take a long time. Everything sounded so nice.

SEN. ALLARD: Yeah.

SEN. DOMENICI: But, you see, that means you're going to have Yucca sitting over here waiting for this new recycled fuel. It's got to wait over there, circling the globe for about 30 years. Looks to me 20 to 30 years. I don't quite know how we're going to get legislation passed to do that.

SEN. ALLARD: Aren't we in the courts on that right now, Mr. Chairman?

SEN. DOMENICI: Yeah. But we've got to pass something soon deciding what happens to the Yucca property --

SEN. ALLARD: I see.

SEN. DOMENICI: -- the real estate, railroads, the physical site. And in doing that, we've got to kind of decide and say what we're going to use it for, so Harry Reid will know. If nothing else, we've got to tell him. And right now it looks like we're telling the world we're going to put spent fuel rods in there. We just heard him say we're not going to do that; he said it round and about. But everybody's saying we're not going to do that.

So we've got a facility that we're moving in that direction, and we're not going to use it for that. We've got to change the law and say what is it we're going to use it for. And we've got one hang-up. There is a law that says we've got to put military waste in that facility. We don't quite understand how that fits. I don't know; the ambassador may have negotiated that arrangement. Maybe he knows. That's a big one.

But if that wasn't in the way, we could make Yucca sit over there for 30 years and wait for this new recycled material. You understand this new recycled material is going to be a fantastic human achievement if it works. You just remember this number. In quantity, you reduce the quantity 100-fold. So if you're going to put a spent fuel rod in and it was going to take 100 cubic feet and you do this recycling, it's going to be one cubic foot of material. That's pretty interesting, isn't it?

SEN. ALLARD: It is. And I've seen part of that process.

SEN. DOMENICI: And the process, what you've got left over is very easy to handle, because it doesn't hide the half-life that he spoke of generally.

SEN. ALLARD: With the enhanced process. I think that's wonderful, yeah.

SEN. DOMENICI: Well, that's the president's GNEP program. That's what we're going to try to do. We do have some money in here, and we're going to start it.

SEN. ALLARD: Good.

SEN. DOMENICI: Two hundred forty million -- $250 million. But that's such a little down payment. Japan's interested. India's interested. So maybe we get started and it might turn into an international program. Maybe you'll help us pay for it.

SEN. ALLARD: Yeah.

SEN. DOMENICI: Could be. I'm willing to give it a shot if I could figure out how Yucca fits in the middle of this.

SEN. ALLARD: Well, I'm with you, Mr. Chairman, on that.

SEN. DOMENICI: We'll work on it. (Inaudible) -- down to these things that are important to people in New Mexico; the pension program over there at LANL.

MR. BROOKS: Yes, sir.

SEN. DOMENICI: I sent you a letter urging you to oppose the University of California's efforts to separate the LANL pension from the broader university retirement system. I got your letter in which you indicated you didn't have enough information. Has anything changed since you wrote me the letter that might affect the LANL retirees?

MR. BROOKS: I continue to be absolutely committed, as I told you before, to making sure they're treated fairly. I continue to have nothing from the university other than what I have heard in the press. I am told that a letter will arrive shortly explaining what the university proposes. I haven't seen it yet as of this morning. And so I know nothing more than I knew when I signed the letter.

SEN. DOMENICI: I have one question on GNEP. Mr. Paul, can you please tell me what the NNSA role is in the Global Nuclear Energy Partnership and what NNSA budget provided for '07-'11? Will you do that? Or Mr. Ambassador, you do it; whichever.

JERRY PAUL (principal deputy administrator for nuclear nonproliferation activities, NNSA): Thank you for the question, Mr. Chairman. We just recently, as of last week, reached an understanding with the Office of NE, the nuclear engineering office, about the areas where NNSA would play in the Global Nuclear Energy Partnership. They are in broad categories, the development of the advanced safeguards and security technologies that are a key element to GNEP. They are the establishment of the Reliable Fuel Services Bank, that independent central bank, the 17.4 metric-ton-designated HEU, to be blended down to LEU to allow recipient states to access that energy in return for developing a fuel cycle indigenously.

And thirdly, providing the primary support for establishing the G and the P part of GNEP, the global partnership portion; that is, putting together the supplier group partnership, the two eloquently alluded to, France and Russia, China, the U.K., ourselves, with strong involvement by the IAEA, and potentially others, as well as the recipient-state partnership, those countries that would forswear developing an in-house capability. Those are the three primary areas where the NNSA, and largely NA-20, the nonproliferation shop, would play a lead role.

The most significant area where we anticipate a budget impact would be in developing the safeguard technologies. We do not have a specific request in the '07 budget for that because it is an extension of the current safeguard technology advancement work that we're doing, for example, at the Rekosho (ph) site in Japan. But we anticipate in the near future having a budget request tailored to those three areas, Mr. Chairman.

SEN. DOMENICI: I had two other questions with reference to GNEP that pertain to you, Mr. Paul. I'm going to submit them. You can answer them for the record. You've got 10 days; whatever it takes.

We have some further questions that we'll submit in writing, Mr. Ambassador.

Senator, do you have any further questions, either now or that you want to submit?

SEN. ALLARD: I may have a couple of questions to submit later on, Mr. Chairman.

SEN. DOMENICI: All right. The record will be open for a couple of days.

SEN. ALLARD: Let me -- thank you. I'll review it with my staff.

SEN. DOMENICI: All right, if there are no further questions, we stand adjourned. And we thank you for your testimony.

Oh, I have one last thing, Mr. Ambassador. I make it as an observation. And I should have done it in my opening remarks, and I apologize.

You still have a lot of contracts for big construction projects and big pieces of equipment and big things. You're still the big- stuff guy. And I have this big project; you're getting it finished. I want to make sure that you know that even though we didn't go through project by project, that we are asking you clearly to make sure that somebody is watching and careful that those programs are being managed properly.

We don't want overmanagement; that is, we don't want 10 people managing the same thing. But we don't want to get caught with big errors that should have been found out months and months earlier, dropped on our head at the last minute on any of these programs and projects. And we've been told that that's not going to happen anymore. And I'd just like your thoughts on the subject. I know we've gotten new management in one laboratory and we've got a lot of other things going. But could you address that issue, please?

MR. BROOKS: And we also have new management in the Nevada test site that started its transition today or yesterday and will be taking over this summer.

The secretary has made it very clear that he expects us to do a much bigger job at making promises that we can keep and then keeping our promises. And he regards stating that we're going to build something for a fixed amount of money in a fixed time as a promise. And so he's made it very clear that he expects us to improve the department's historic performance.

Our performance right now is pretty good on those things that we have done before and pretty bad on these large, one-of-a-kind projects. But we are gradually improving. We are absolutely committed to doing what you just told me to do, sir.

SEN. DOMENICI: Well, let's hope that that's the case. We don't have a lot of latitude in these budgets anymore. We can't have another $200 (million), $300 (million), $400 million to spare that we can't pay for them. That's all there is to it. So I hope we're not going to destroy some laboratory because somebody makes a mistake.

MR. BROOKS: We have no intention of doing that, sir.

SEN. DOMENICI: We stand adjourned until the chair calls another meeting.

MR. BROOKS: Thank you, sir.

Return to Menu


5.
U.S. REPRESENTATIVE DAVID HOBSON (R-OH) HOLDS A HEARING ON FISCAL YEAR 2007 APPROPRIATIONS FOR ENERGY SUPPLY, CONSERVATION, AND FOSSIL ENERGY PROGRAM
Federal News Service
4/5/2006
(for personal use only)


COMMITTEE: ENERGY AND WATER DEVELOPMENT AND RELATED AGENCIES SUBCOMMITTEE
SUBCOMMITTEE: HOUSE APPROPRIATIONS COMMITTEE
SPEAKER:
U.S. REPRESENTATIVE DAVID HOBSON (R-OH), CHAIRMAN

WITNESSES:
DAVID GARMAN, UNDERSECRETARY OF ENERGY FOR ENERGY, SCIENCE, AND ENVIRONMENT
KEVIN KOLEVAR, DIRECTOR, OFFICE OF ELECTRICITY AND ENERGY ASSURANCE, DEPARMENT OF ENERGY
ALEXANDER "ANDY" KARSNER, ASSISTANT SECRETARY OF ENERGY FOR ENERGY EFFICIENCY, AND RENEWABLE ENERGY
DENNIS SPURGEON, ASSISTANT SECRETARY OF ENERGY FOR NUCLEAR ENERGY
GEORGE RUDINS, DEPUTY ASSISTANT SECRETARY OF ENERGY, FOR COAL AND POWER SYSTEMS

HOBSON: The hearing will come to order.

I assume I don't have to read the Constitution to you guys to understand what we're doing today, as I did with the secretary; he reminded me that he can read the Constitution. I just need to remind people.

And we're not going to swear people in today. We thought about it, but we're not going to.

The subcommittee meets this morning to hear testimony from the undersecretary on the budget request for the energy supply, conservation, and fossil energy programs for fiscal year 2007.

I welcome Mr. Garman for appearing before the subcommittee, and without objection your prepared statement will be entered into the hearing record.

Mr. Garman, the American people are concerned about developing alternative or reliable energy sources and reducing our dependence in this country on foreign oil.

Your portfolio as undersecretary includes the research activities that have a direct impact on displacing foreign oil, including applied research and development programs for renewable energy, energy conservation, fossil energy, nuclear energy, and also the reliability of our nation's electrical transmission systems.

These are programs we would like to discuss with you today and the president's fiscal year 2007 budget request for these activities. Frankly, at first blush, the budget request for fiscal year 2007 appears, to me, very aggressive for renewable programs, proposing significant increases for biomass and solar research. However, these increases are at the expense of other energy savings programs, notably the $78 million decrease for weatherization programs.

Frankly, knowing the overall Approps Committee, I don't think that's going to hold.

Likewise, with the nuclear energy research program, there's an increase of $250 million for a long-term initiative Global Nuclear Energy Partnership -- I think most people call that GNEP -- at the expense of other nuclear energy activities that seek to maintain an increase in the nation's nuclear energy base load in the near term.

That's your problem, Mr. Spurgeon.

These long-term initiatives also come with pricey outyear mortgages. GNEP's fiscal year 2008 projected need is $800 million, and lifecycle costs are $40 billion. And commitments for loan guarantee programs -- the Alaskan pipeline alone could be as high as $2 billion in fiscal year 2008.

I had a little discussion with the secretary. I think we all share some concerns about loan guarantees and the ability to administer loan guarantee programs. And having been a former lender, I get nervous. And having done the MILCON deal where I tried to restrict government loans in those areas and with the scoring problems -- she didn't write all this, but I'm telling you -- with the scoring problems that are there, I have a lot of difficulty with this approach.

I'm not opposed with where we're going. From a financial standpoint, we need to look at this a little better, maybe. I'm not sure that the department has thought much about how these initiatives are going to be accommodated in the outyears. And are we putting our eggs in a few baskets and possibly overlooking other opportunities for energy independence?

We better have a good understanding of these mortgages and what will be displaced as a result before we sign up to them. You know, you go get a HUD loan today, they've got a whole book of disclosures, stuff that you've got to sign today. I don't know who's going to sign that for you guys when we do this, but I mean this has some long-term consequences.

So I just think we need to understand about this.

And by the way, I think there are some North Dakota students in the audience today. Where are they?

Do you want to stand up and let everybody see kids down here learning about what's going on? So that's the future of our country, and thank you all for being here.

I don't think there's anybody from North Dakota on this committee, but we're glad you're here and hope you can learn a lot about what's going on here, because what we do here in this area is going to affect your quality of life in the future and the quality of life of this country. So this is nice of you to be here and I hope you learn something today. Thank you for being here.

After we hear from Mr. Visclosky, we will hear testimony from the department.

Mr. Visclosky, do you have any remarks that you'd like to make? Do you have any high school kids here from Indiana or anything?

VISCLOSKY: My students are in school in Indiana.

(LAUGHTER)

But I would want everyone in the room to know that I actually do have a North Dakota resident and a graduate of North Dakota on my staff that does my press work, and that's Justin Kitsch (ph). So I appreciate you being here very much.

Mr. Chairman, I have a statement and I'd ask that it be entered into the record, but would mention that I am profoundly concerned that there has been about a threefold increase in energy imports that has occurred between my arrival in Congress and today.

I also would note that even after the passage of the Energy Policy Act last year -- and I did vote and support the act -- the Energy Information Administration is projecting that there will be further increases in our dependence on foreign oil over the coming decades.

I regret that in the testimony today there are cuts that are justified to some important programs as being explained because of budgetary constraints. I do think it's important that we find money to address concerns that we believe are crucial, and I certainly believe that overarching issue is crucial to us.

I do appreciate that there are increase to funds available, as far as demonstrating the economic viability of biofuels, the integrated manufacturing of photovoltaic cells and the commitment to U.S. and nuclear fuel recycling.

But as the chairman aptly pointed out, what we're doing is moving shells around the top of the table; that's all we're doing here.

And weatherization was cut, as the chairman pointed out. Petroleum and natural gas research was cut. Clean coal programs, which are very important, I believe, to our country, were cut; vehicle and industrial conservation technologies were cut.

And so we're simply engaged, from my perspective here, in a very dangerous shell game, and not in any way, shape or form addressing the underlying problem we face, and that's that threefold increase in dependency on foreign energy sources that lead to untold and numerous problems that we face.

But again, I thank you for being here, and thank you very much, Mr. Chairman.

HOBSON: Thank you.

Mr. Garman, your turn.

GARMAN: Thank you, Mr. Chairman, and noting that my full statement will be in the record, I'd just like to say a few words to stress a few key points.

But before I do, let me introduce to you the folks on the panel with me, including two brand-new assistant secretaries that we have with us this morning.

Beginning on my right, your left, is Kevin Kolevar, the director of our electricity office, who you know very well. We also have Andy Karsner; Assistant Secretary Karsner leads the Office of Energy Efficiency and Renewable Energy.

Assistant Secretary Spurgeon is our new assistant secretary for the Office of Nuclear Energy. And finally we have George Rudins, deputy assistant secretary for coal, sitting in for Assistant Secretary Jarrett, who is at a Carbon Sequestration Leadership Forum meeting in India that was scheduled quite some time ago, or he would be here today.

If you asked me to distill this entire DOE budget with all its puts and takes into a single theme or concept, it would be that we're emphasizing science, research and development in pursuit of transformational energy technologies.

This budget significantly increases our investments in clean energy research and the fundamental science to support that research. We have proposed some significant increases in areas such as the applied solar energy research budget, up 78 percent; the applied biomass research budget, up 65 percent; applied hydrogen research, up 42 percent; and applied nuclear energy research, up 56 percent.

We've also proposed a significant increase in basic energy sciences under the direction of Dr. Orbach. While that's not a specific subject of this hearing this morning, it's nevertheless very important, because we recognize that we must strengthen the connections between our basic and applied work. And we're determined to make the activities in our basic sciences more relevant and more strongly linked to the applied energy programs, working to advance practical energy technologies, in areas such as solar, nuclear, hydrogen and biomass.

Because these increases, as the chairman and the ranking member pointed out, have been sought within an overall department budget that's level funded, we have had to propose reductions in some otherwise worthy programs -- low-income weatherization has been mentioned -- because we felt it was important to articulate priorities and make some tough calls, mindful of the practical limitations on discretionary spending that you as appropriators face.

As you all know, the Department of Energy could more accurately be referred to as the department of nuclear weapons, radioactive cleanup, science and energy, in that order, if the department's name were to more accurately capture its activities and the priority placed upon them as reflected by our levels of spending in those areas.

It's surprising to some to learn that we spend less on applied energy research at the department than we do in these other areas, and to put it bluntly, this is a budget that attempts to begin to put the energy back into the Department of Energy, not just in the applied energy programs, but in the science programs that can contribute new thinking and new approaches in meeting our energy challenges.

And at a time when this nation is concerned about energy security and clamoring for new energy solutions, we should strive to do nothing short of that.

So with that brief introduction, Mr. Chairman, I and the team with me would be pleased to answer any questions that you might have this morning or in the future.

HOBSON: OK, we'll start off with Mr. Simpson. He was here first. Our rule is that the members who show up first get to talk first, and that usually gets people to show up a little better.

SIMPSON: Thanks, Mr. Chairman.

You mentioned the citizens of this country are interested in energy security, being less reliant on foreign energy. The Department of Energy was formed in the 1970s as a result of the energy crisis at that time because we were 30 percent dependent on foreign energy. Since the department was formed, we're now 60 percent dependent on foreign energy.

How can we have any confidence that we're moving in the right direction? I realize this was not your fault.

(CROSSTALK)

GARMAN: And I think it goes to the point that of the $23 billion budget of this department, look at the actual amount that we do spend on energy. It's a relatively small amount.

That trend line is upward now. This budget, in the applied energy and the basic energy sciences program, is significantly up. And we think that's important. We think it's important to begin to make that change, and as I said, somewhat crudely, put the energy back in the Department of Energy, because we have a lot of missions.

And they're important missions. And in saying that, I don't mean to diminish the importance of the cleanup mission, the national security mission, because they are incredibly important, but this work that has been done at the department -- I guess the second part of my answer -- is, we believe, really at the threshold of delivering.

Solar photovoltaics cost $2.25 a kilowatt-hour in 1980, and we've got it down to around 25 cents a kilowatt-hour. Still too high, but the trend lines look good. We have lots of technologies that are coming into play today, both on the efficiency side and renewables, coal technologies -- because of market signals in the pricing, it's getting to the point where those technologies are starting to compete.

Wind. Mr. Karsner here used to develop wind projects in his prior life, and he can tell you how that technology is coming into the fray.

So the progress of the past has been good, but we need to accelerate it.

SIMPSON: This administration, frankly, has been the first administration that I've seen that really has been pushing some of these alternative energy means to reduce our reliance on foreign energy. It's the first one that's really been pushing for nuclear energy for quite some time, and I commend you for that.

Could you tell me where we are with the GNEP program? How far along is that, beyond the conceptual sort of thing? And the reason I ask this is in the Budget Committee, as you're probably aware, there was an amendment offered that would have taken money out of the GNEP program and put it into some other things.

The comments made by the member offering that amendment were: Congress has never approved this, we don't know what's going on there, this is just something that the Department of Energy wants to do, and to reprocess, which would be damaging to us in terms of proliferation and those types of things.

How far along is that project and why doesn't Congress as a whole know more about it and what we're doing?

GARMAN: Let me try to describe with an overarching comment and then turn to Assistant Secretary Spurgeon for any embellishment he might want to make.

But clearly, as we look at the future, nuclear has to play a significant role, not only in the effort to provide electricity and economic development and opportunities that don't exist not only here but around the world, but to do so in a way that doesn't contribute to the carbon dioxide burden of the atmosphere, and in a way that doesn't contribute to criteria pollutants and urban air quality, issues along those lines.

If we're to do that, if we are to position nuclear for the future, we have to deal with the two issues that stand in the way of that expansion: waste management and proliferation. GNEP is an attempt to deal on a technology basis with those two issues head-on.

And yes, there are a lot of questions about GNEP -- understood. And it is a lot to ask Congress to understand GNEP in the grand scheme, particularly when we're portraying some of the things that this technology development work might make possible -- international fuel leasing and fast-burner reactors and all this other work.

But right now, I think it's prudent for us to think of GNEP as the means that we use to position nuclear for the future, for the long-term future.

If nuclear is to have a future, we really need to deal with these issues of waste and proliferation over the long term. I know we'll get into more discussion, but I don't mean that also to diminish our -- that doesn't mean it takes us off our short-term attention on what we do with approximately 55,000 metric tons of waste that exist today. We've got to deal with that too.

So it's not a trade of a long-term fix that deals with all of the problems in the short term, but a way to position nuclear for the long term and the future, because we need lots of base load clean electricity, and nuclear's a great way to do that.

SIMPSON: I understand the general concept of what we're trying to do here, and I agree with it. It's the right thing to do. We got to close the fuel cycle.

But where are we beyond -- as a committee, what can we expect in the future? Have we got it down, laid out in plans of what we plan on doing with that? Is the international community involved; to what extent? Private sector, et cetera, et cetera?

GARMAN: What we're looking at doing in the short term is -- we have developed these technologies, and demonstrated these technologies at lab scale, and are reprocessing in a clean, non-aqueous fashion, two to three kilograms of waste at a time.

We have enough confidence in the technical process that we can start to scale up that, and demonstrate engineering-scale facilities to really hash out the technology and show that it will work.

Let me turn to Dennis here for...

SIMPSON: Do we have a reactor that will burn the type of fuel?

SPURGEON: We do not have a reactor that will burn the type of fuel the way we want to dispose of it. You can recycle some of this fuel in reactors of the current generation, but the best way to recycle it is in a fast spectrum.

We don't have a fast-spectrum reactor anymore operating in this country. EBR-2 (ph) was probably the last one other than FFTF that was shut down.

So there is needed to be a restart of that work, and that is part of GNEP.

In the reprocessing area -- we have a lot of history in reprocessing in this country. After all, we've been reprocessing

HOBSON: We ought to call it recycling. It's a lot better to call it recycling; it's much greener.

(UNKNOWN): Or new and improved.

SPURGEON: From now on I am a recycle person. But we have been doing it.

What we're trying to do now, what we need to do, is to take care of that additional step, which is just to recycle in a way that, A, there is no separated plutonium, and B, there's no waste stream coming out of that plant.

And that's the objective, and we can achieve that.

SIMPSON: Do you have a timeline? You're requesting $250 million this year for GNEP. Do we know how much next year, how much the year after, how much the year after?

SPURGEON: I think in general terms, sir, but that's something I want to look at. This is my third day on the job, and so...

(CROSSTALK)

SIMPSON: Well, what have you been doing for three days?

SPURGEON: But that's the key, and I understand that.

SIMPSON: I appreciate it.

SPURGEON: It's the key to be able to explain and to demonstrate to this committee and others that we do know what we're doing, in effect, and that we are going to be good stewards of the money that you provide to us. But it's key that we get started. That's the critical path.

We're roadblock removers. Our objective is to expand the use of nuclear energy in the United States, period. And this is one thing we can do to remove one of the perceived roadblocks.

SIMPSON: Well, I appreciate what you're doing and I agree with the overall concept of what we're doing here, and I just want you to know that I think the committee has to have some future plan, something that we can look at -- and Congress does, not just the committee, but Congress does -- if we're going to get this done.

But I'll quit for now, Mr. Chairman, and we'll have another...

(CROSSTALK)

SIMPSON: Go ahead.

HOBSON: (OFF-MIKE)

LATHAM (?): Thank you, Mr. Chairman.

HOBSON: We're going to put the clock on for five minutes...

LATHAM (?): You decided to put it on for me.

HOBSON: No, I had it on.

(CROSSTALK)

SPURGEON (?): It's because my answers were too long-winded. I'll cut them back.

LATHAM (?): I've read your formal remarks here, and you have in the conclusion: energy is central to our economic and national security. And I've discussed this with you privately. Where is conservation in the overall scheme of things?

I understand that the secretary has set forth -- and they're outlined on page three -- a number of operating principles. There seems to be a fairly serious omission. Where's conservation on your radar screen?

GARMAN: Conservation is...

LATHAM (?): I'm all for the American Competitiveness Initiative, but one might say, "Is there something called an American Conservation Initiative?"

GARMAN: Conservation is fundamental. In fact I like to think of it more as efficiency.

LATHAM (?): It's fundamental, but it's actually not reflected in one word in your comments.

GARMAN: Well, it is fundamental and implicit, if not explicit, because we recognize that energy efficiency is the most affordable and quickest energy resources that we as a nation can have. And we have maintained a variety of programs to promote energy efficiency, but that's not all that works to promote energy efficiency. The market is an extremely powerful promoter of efficiency, and market forces have worked for years to promote efficiency.

And in fact, I think it's notable that -- if I'm not mistaken -- in 2005, we used less oil in this country for light-duty transportation than we did in 2004, because the market was working, consumers were getting a signal and they were reacting. In October of last year, we, for the first time in many months, sold fewer SUVs in this country than we did light-duty passenger vehicles.

And that's because consumers were responding. And they do respond, and they respond in a way that sometimes government programs can't necessarily compel them to do, but it happens. So I take the point.

LATHAM (?): Yes. There's a public perception out there that we didn't learn the lessons of the 1970s in terms of conservation -- we actually did send a pretty strong message to the oil producers by cutting back through personal sacrifice, because there wasn't any alternative; people couldn't pay for their gasoline -- that we've sort of slacked off over the last 30 years.

GARMAN: But let me assure you that -- last October and November, when the secretary, when the deputy secretary, when myself, when Doug Faulkner and others, were, before Andy was here -- we were working the Home Depots, the Lowes, in Toledo, Eau Claire, Missoula. The energy conservation message and the "get ready for winter" message were very much on our minds, on our lips and in our actions.

And this is, to us, fundamental, to make sure -- and we maintain hundreds of millions of dollars worth of programs to help Americans understand that when they get that gas bill, and they want to do something about it, that they know what to do. We can't necessarily do it for them, but we certainly need to work on the information barrier so that they know how to read insulation and how to go about and ask their building contractor or window replacement specialist what they ought to be asking for, to look for Energy Star appliances, and to do all the other things that we're trying to encourage consumers to do in the marketplace.

LATHAM (?): Well, I think we need a larger megaphone. I'm not sure how we design it. The bulk of your budget's investment seems to be -- even though you've built your testimony around a lot of new programs and reinvesting in existing programs, which I'm highly supportive of, solar and biofuels and things of that nature -- seems to be focused on clean coal technologies.

Obviously we've been inculcated here with a view that we have 400 years of coal that we could utilize. As a state that's sort of on the receiving end of quite a lot of particulate matter, which has made us violate the Clean Air Act for the last 15 or 20 years, I'd say from the central part of the country, as well as maybe from the TVA states, the thought that somehow we'd be embracing more coal is disturbing.

HOBSON: Clean coal.

LATHAM (?): Clean coal, yes -- a non-renewable fossil fuel.

Can you talk a little bit about why that's such a centerpiece of your -- I'm sure the chairman could -- why is that such a centerpiece? Actually, in some ways it sort of minimizes some of the other areas where I think we are accelerating investments, rightfully so.

GARMAN: In the same vein that not only in this country but around the world we need lots of clean base-load electricity, the opportunities presented us for clean coal are too good to pass up. And when I say clean coal I mean not only NOx and SOx and particulate matter, but also carbon dioxide.

We have to deal with the carbon dioxide problem, because even if we were to stop burning coal, we know that India, China, South Africa and the rest of the world would continue to burn coal, so we have to develop the technology to be able to take this resource that people are going to continue to use and burn it, lowering emissions, and eventually get it to a...

(CROSSTALK)

LATHAM (?): But even now we can't do it.

GARMAN: Well, yes we can, and in fact, we are on the threshold, again -- AEP and some of those utilities in the middle part of the country that burn a lot of coal are starting to turn to IGCC coal plants for their new builds. And this is a technology that we at the department have been working on for years, and it's very gratifying for us to see that this technology is going to start making it into the marketplace.

It's also at the center of the technology itself, at the center of our FutureGen project, which of course gasifies the coal and allows us to be able to separate out the synthetic gas and the carbon dioxide, sequester the carbon dioxide and take that out of the equation.

So we think it's very important not only for the United States but for the world that we continue to develop this resource that will be used in the future.

LATHAM (?): But for the foreseeable future we're basically using what you call legacy systems.

GARMAN: There are a lot of pulverized coal existing plants out there, and they continue to generate electricity. Yes, sir.

LATHAM (?): And generate other things which are noxious, and...

GARMAN: Yes, sir.

LATHAM (?): OK. Thank you, Mr. Chairman.

HOBSON: Mr. Berry?

BERRY: Thank you, Mr. Chairman.

I applaud your effort to address what I think is a most serious matter, not only the CO2 part of the atmosphere but the pollutants and all these other things that are connected directly to our massive use of energy in this country and around the world. You can't develop an economy without it, it appears.

So I certainly appreciate what you're doing. I would like to ask you just a little bit -- in Section 917 of the 2005 Energy Policy Act, it authorized the secretary to establish a series of advanced energy efficiency technology centers around the country, in areas the secretary determines to have the greatest need of the service of such centers.

Can you tell the subcommittee where DOE is in developing this, and what will be the criteria, and how will we decide greatest need, and give us a little insight into that, please?

GARMAN: I'll be happy to do that. This is perhaps the way to open up a discussion with the subcommittee about one of the conundrums we face.

The Energy Policy Act tasks us with a great many things, 363 things that I'm tracking: miscellaneous mandatory requirements, reports, rule-makings and the like. This Section 917 requirement that you mentioned is in that category of miscellaneous-mandatory.

It's directing us to undertake a program for which we have no easily identifiable source of funds, and in fact when you add up the authorization levels in the Energy Policy Act, in total, there's explicitly $17 billion a year authorized and a lot of other provisions authorizing, quote, "such sums as necessary," unquote.

And clearly we don't have enough funding, and I don't think that this subcommittee envisions giving us sufficient funding to undertake all of the new start activities that are enumerated in that act, and we are having to go through a process of prioritization and seeking guidance from this subcommittee as to which provisions we should fund and which provisions we should hold in abeyance until such time funds are available.

Section 917 provisions are one of those things that we're going to try to fulfill the spirit of the requirement. We have not sought explicit funding, to my knowledge, in the FY '07 budget, but we're going to do the best we can to try to meet the goals of that requirement.

I want to turn to Assistant Secretary Karsner and see if you have anything you want to add on that.

KARSNER: No, I concur with your remarks, David.

GARMAN: So that's the conundrum we face, because we know we just simply can't come up here and ask the committee for $17 billion a year to fund everything in that act. And not all of that is ours, but a good portion of that is ours.

BERRY: Would it be helpful if we designated some funding for that?

GARMAN: Well, of course, I'm here to support the president's budget, but...

BERRY: Sure, I understand that.

GARMAN: ...obviously we are seeking this subcommittee's understanding of the priority provisions in the Energy Policy Act that you want us to focus on.

BERRY: Thank you, Mr. Chairman.

HOBSON: Mr. Rehberg?

REHBERG: Thank you, Mr. Chairman.

Thank you for being here to answer my colleagues' questions about coal. Montana alone has about 250 years' supply of coal, and half of the electricity in America is generated using coal. So if we were not to support the coal budget, we'd be hurting our own economy.

But, then my question is, why did you cut the budget for the Clean Coal Power Initiative? It seems like an anomaly because we're certainly focused on FutureGen, and FutureGen is FutureGen, and so it's not here and now, and I see an appropriation cost of about $203 million out of the 2007 budget. So it just seems like we're cutting off our nose by cutting the short-term research dollars for something that we hope is going to happen in the future.

GARMAN: The congressman is correct that we're proposing a cut in the total coal budget of about 12 percent, and you zeroed in on the Clean Coal Power Initiative, which is a demonstration program that we cut from about $50 million to about $5 million, and so let me explain that as best I can.

The Clean Coal Power Initiative is the program where we demonstrate technologies, and this has been a pretty successful program because it gave us the confidence...

REHBERG: To in fact clean up much of what he's talking about.

GARMAN: Right. And through which advance gasifiers and gas separation plants and other component technologies were developed and demonstrated. We, however -- and the Office of Management and Budget, it didn't escape their attention either that we had about $500 million in committed but uncosted and unobligated money in that account.

REHBERG: But for very good reason, if I might interject.

GARMAN: For very good reason.

REHBERG: If you're going to get private industry to participate, which is what FutureGen is all about, that money has to be committed. And if Congress or the president keeps stealing the money, it's not going to be there when we need it.

GARMAN: And actually there is a statutory requirement in that program that requires you to have this money appropriated and on hand, so it is almost by design a program that's going to have very high, uncosted balances until you can work out the cost-sharing arrangements with private industry, and so your point is extremely well-taken, and you're right.

Having said that, I'd make two points. Some of that money has been sitting there some time, and Assistant Secretary Jarrett has committed to me -- he's going to take a good scrub at that money and try to get those dollars moving and those projects under way, because it doesn't do us any good to have money sitting around. This is a subject that I've had long conversations with both the subcommittee staff and the chairman about.

We've got to get the money moving, more quickly sometimes than we have in the past, number one.

And number two, we are at a point where actually new demonstration projects that would come online as the consequence of a future solicitation under CCPI probably wouldn't be able to inform us very much on FutureGen, because that train is moving and those technologies probably wouldn't be ready. We think we've got the pieces...

REHBERG: Why don't we talk about FutureGen really quickly. One, how many other foreign countries have you got committed? I see that India most recently committed, I believe, $10 million. How many other foreign countries?

And I believe OMB suggested we had to get up to $80 million?

GARMAN: We have India committed, but last week actually at an IPHE meeting, I was meeting with delegates from Korea and China, and I think that those two are planning commitments.

REHBERG: Have you selected Ohio yet for the location?

(CROSSTALK)

GARMAN: We haven't selected Ohio, sir.

REHBERG: It might not be a bad idea.

George, do you have anything you want to add on that?

RUDINS: No.

REHBERG: Could I ask, when is the decision going to be made? Are we going to be able to get something done in fiscal 2007 as far as a decision, where it's going to be located?

RUDINS (?): The FutureGen alliance just today issued a competitive solicitation on March 4, seeking proposals for sites, and got a very strong response; received indications of intent to propose from nine different state areas, with 22 candidate sites. The proposals are due back, the actual final proposals, due back the first week of May, so it's moving forward on a very accelerated pace, along with the NEPA activities, related...

REHBERG: Are those public?

RUDINS (?): Who the bidders are?

REHBERG: Yes.

RUDINS (?): The FutureGen alliance has not yet released that information, so I do not know whether they intend to make them public or not. I can get you that information later.

REHBERG: If it is, yes. I don't want to create a problem, but if it's public information I'd like to know the locations.

RUDINS (?): OK.

REHBERG: Great. Thank you.

Thanks, Mr. Chairman.

HOBSON: Mr. Visclosky?

VISCLOSKY: Thank you.

Mr. Secretary, a number of members have talked to you about coal. I happen to represent one of those middle states that was mentioned earlier. We have a lot of coal in Indiana, and I noticed that on page 42 of the department's fiscal year 2007 budget request, the statement is made that coal is the most abundant U.S. energy resource, with domestic reserves equal to the energy potential of the world's oil reserves.

And you cut research by 12 percent. Why? What is that all about? How can you justify that?

In your document, you mention the potential, and then you cut it 12 percent.

GARMAN: Right. I think it's the aspect that -- coal is very successful in the marketplace. It has 52 percent of the electrical generation, and we are trying to focus emphasis to enhance our diversity of primary energy inputs.

And not having sufficient funding to do everything, and noting coal's success in the marketplace, we felt that it was important to diversify the funding stream to allow us to do more in biomass, more in solar and some of those other things. That's my short answer.

VISCLOSKY: Let me ask it a different way then. If we have reserves in the United States equal to the energy potential of all the world's oil reserves, ought we not to have our foot to the pedal on the floor looking to optimize the BTU value of every one of those tons of coals? Despite its acceptance, there's not more progress we can be making in terms of squeezing more BTU?

And I, myself, think that we have an environmental problem here, living in one of those middle states, that also need to be addressed, given the acceptance and the use of coal today. And we cut it 12 percent?

GARMAN: Again, I think this is partly the function that we have a lot of successful technologies, such as IGCC, that do address some of the environmental issues and do burn coal much more efficiently that existing pulverized coal plants, coming online.

They're a bit more expensive, and we do have more work to do to get as much cost out of that system as possible. But part of that occurs, as is happening now, when companies such as AEP and Southern are ordering and planning to build new IGCC plants. There will be a great deal of learning and cost optimization that comes as a consequence of that.

And as I indicated earlier, I think we are at the threshold of a new frontier in coal, to make coal a 21st century fuel, and to optimize its use more. And we believe the market's responded, and those technologies are coming into the mix.

VISCLOSKY: Are there any orders for those new plants you mentioned?

GARMAN: We just did the groundbreaking, I think, on the Southern plant...

VISCLOSKY: So you have one.

GARMAN: ...and AEP is looking -- I don't know that they've got actual orders, but they are discussing the possibility of two new plants, I believe.

RUDINS (?): General Electric has been marketing IGCCs. They feel they're in a position to make a strong commercial offering with wraparound warranties, which is one of the issues that buyers were sensitive to with new technology, having someone with a deep pocket standing behind it. So that's a fairly new development in the past year or so, and so they're aggressively marketing it.

It's reported that there are on the order of 17 IGCC projects that are being contemplated, contemplated in a way that not necessarily will they all go forward, maybe a fraction of them will go forward, but there's been a peaking interest, a very significant peak in interest compared to prior years.

VISCLOSKY: All right. Thanks.

We talked about the investment in the Clean Coal Power Initiative, and my understanding over the last six years -- DOE has invested $553 million, and that the private sector has matched that to the tune of $2.2 billion. So aren't we also having a significant multiplier effect, if I'm doing my math right, by fourfold, with the private sector investment with the Clean Coal Power Initiative?

GARMAN: I'll let George comment on the math, but you are absolutely correct, that one of the advantages of the CCPI program is it's partnering with the private sector and the cost-share benefit that we get as a consequence of that.

VISCLOSKY: Let me ask you another question. Is it the department's position that we have no more progress that can be made on advanced NOx control technologies?

GARMAN: No, I don't believe that is -- there's always more progress that can be made.

VISCLOSKY: Would the department's position be that we have no more progress we can make on pool (ph) gas water recovery technologies?

GARMAN: No, sir. More progress can be made.

VISCLOSKY: Would the department's position be we have -- let's see. OK, I'll stop there.

And on the FutureGen, you mentioned that you do have an agreement with India; at this point that's the one country that we do have an agreement with. And on these, looking for $80 million of foreign contributions as I understand it. What is India's financial commitment?

GARMAN: $10 million.

VISCLOSKY: And how will that be paid, and over what period of time?

RUDINS (?): That is still to be negotiated. But it'll probably be in $2 million annual incremental payments over probably roughly a five-year period.

VISCLOSKY: And negotiations are taking place with China, as I understand it.

GARMAN: Some discussions are taking place, and as I said, the Koreans just stood up last week for the first time and informed us that they would like to join the alliance.

VISCLOSKY: Would it be your anticipation, if we do have an agreement with China, that they would make a payment such as India, or that they would just forgive us some of the money we owe them?

GARMAN: No, sir. $10 million is the price of admission, a minimum of $10 million.

VISCLOSKY: How would they make that transaction? Would they forgive some of the debt we owe them, do you think?

GARMAN: No, sir. I think I would insist on a wire transfer of cash.

VISCLOSKY: I like that. Cash is good.

One final question -- if I could, Mr. Chairman -- on oil and gas. For fiscal year 2006, Congress restored funding for oil and gas research and development activities that had been slated for closeout by the department, adding back about $40 million.

These activities were targeted at small independent producers in the United States to aid in the recovery of wells that might have been closed, to improve drilling technologies, to get as much oil out of the wells as possible, for environmental protection and for long-term R&D on methane hydrates, which we believe hold great potential as an energy resource.

I am very disappointed that the department has no funds in their fiscal year 2007 budget for these activities, and I am very unhappy that the budget justification that refers to the 2006 oil and gas enacted activities refer to them -- and I'm quoting the department -- as congressionally directed activities.

I would point out, to yourself and everybody who works at the Department of Energy and who has the gall to write that in a budget justification, that every penny you receive is congressionally directed -- every penny you receive is congressionally directed -- not just the ones you didn't ask for.

Thank you, Mr. Chairman.

HOBSON: Thank you.

Mr. Wamp?

WAMP: Thank you, Mr. Secretary.

HOBSON: Let me say, a number of members came in later. We have the five-minute clock on, but we haven't been holding really close to it, but if you run over a little bit we're going to let you run a little bit today.

WAMP: Last week the Renewable Energy/Energy Efficiency Caucus here in the House had just one of the best panels we've had in a long time. Renewable industry was represented kind of across the board. The efficiency industry was there as well in the groups.

And through the whole conversation a couple things really stood out. That the energy bill that we passed that was signed into law was a step in the right direction and most of the tax incentives are like two years at a time, and they need five years for things to really happen. I just want you to comment.

The president's Advanced Energy Initiative gives me great hope for the future and what we're, I think, finally coming to grips with that we need to do as a nation, but I think most people believe out there that a lot of this is going to happen based on this subcommittee's work.

But indeed -- and Nancy Johnson spoke at our conference this morning about it -- a lot of it's going to actually happen over at Ways and Means, and using the tax policy to incentivize things.

Can you just talk about how much of really achieving our goals is going to be basic research and the things that we're stimulating here with appropriations, versus what happens when you use the tax code to incentivize our awesome free enterprise system to actually go in these directions?

GARMAN: Let me say a few words, and then I want to turn to Assistant Secretary Karsner to make a comment, because he has the unique perspective of someone who has actually developed renewable energy projects in the real world.

Yes, the point is well taken that a two-year tax window for a new renewable energy project benefits some renewable projects and not others. You can get a wind project put together in a year or two. It is very difficult, if not impossible to put a geothermal project together in a year or two.

And so by having a two-year window available, that certainly is a factor that can determine which projects can go and which projects can't.

But as important as policy measures such as tax incentives are, if we're going to be really successful, we have to be successful in the unsubsidized marketplace, and that's our long-term goal. We have to be able to have these technologies compete head-to-head with the alternatives, and that is the essence behind the Advanced Energy Initiative.

If we are successful in getting cellulosic ethanol down to $1.07 by 2012, that will enable cellulosic ethanol to compete with regular ethanol and gasoline and will be very important. If we're able to get solar down to 10 cents a kilowatt-hour by 2015, as we envision, and as we're trying to do, there will not be a homeowner building a new home that won't want solar on his or her rooftop, because it just makes economic sense, and it won't need a tax incentive to do it.

So there are two dimensions. Yes, policy measures are very important in that interim period, but we have to envision and we have to strive for that time where the policy measures aren't necessary, and the technology works to decrease that delta between the cost of the renewable and the cost of the competing conventional.

The work that we do in R&D to decrease that price differential is so important because not only does it make the technology get into the marketplace eventually on its own accord, it also decreases the cost of the policy measure that we use in the short term. It decreases the tax impact, or the revenue impact of the tax incentive. So that's why we think the R&D is extremely important.

If Assistant Secretary Karsner has anything to add...

KARSNER: Yes.

Congressman, thank you for your fine work in the caucus and I appreciate your support over the years.

I agree with you about the need to harness the awesome forces of free enterprise to accelerate these technologies to market, and I think there is real risk and real danger in short-term tax policy, which can be implemented irregularly or erratically, actually being counterproductive or potentially detrimental to the economic integration of these technologies in general and the growth pattern.

Fundamentally, the renewable energy industry needs policies, whatever they may be, quantifiably or qualifiably, to be predictable and sustainable and long term enough to project out project cash flows.

Ultimately all of these renewable energy technologies are dependent on lifecycle cash flows to become profitable. And so when you have an inability to plan for the long term, with erratic implementation, you have a stop-and-go cycle that hurts our ability to raise manufacturing, job creation and investment.

WAMP: Quickly, this speaks to the fact that we need a follow-up energy bill to just address this piece of it, I believe, in order to really leverage this.

And then secondly, I love you starting to talk about dates, Secretary Garman, where you mentioned 2012, 2015. It's about time that we start talking about where we can actually get what is achievable, so the American people will go with us through this.

And while the energy bill passed, that doesn't mean that we're necessarily then going to fund all the aspects of it. Do you expect the budgets that come through your department, budget requests in future years at least while you're there, to actually meet the goals of the bill so that we can fund these programs, and not just leave an authorization bill out there hanging unfunded?

GARMAN: We're going to do our best in some areas. In some of those areas where the bill comports very closely to the president's plan, as in hydrogen, I would say, yes, we have a good shot at that.

In some other areas -- I look at the goals of the 1992 Energy Policy Act, and I ask myself how many of those goals have we met? In many cases, the answer is not many.

We have to be realistic about what's achievable with the resources that are entrusted to us. But as we put our budgets together, we are mindful of the Energy Policy Act goals, and we're mindful of the requirements placed upon us by this subcommittee.

WAMP: Thank you.

HOBSON: Ms. Emerson?

EMERSON: Thanks, Chairman.

Welcome, you all.

What viable options have been -- I don't know who I'm going to direct this question to, so you all can just jump in. But I'd like to know what viable options have been identified for use in the 2007 to 2010 diesel engines with the potential to achieve at least a 5 percent replacement of petroleum fuels.

GARMAN: If you're asking me what more can we do with diesel in this country, that's really the essence of your question. And part of our programs are devoted toward making diesel engines -- which are more efficient that gasoline engines, but somewhat dirtier than gasoline engines -- clean. And this is extremely important.

Beginning in 2007 and then ratcheting up in 2010, EPA has very strict standards that don't really differentiate between gasoline and diesel engines all that much. All engines need to be ultra-clean.

And fortunately, again, some of the past work that we've done is starting to find its way into the marketplace, and beginning very soon you'll be able to buy -- you can buy good, clean diesels today, in the Jeep Liberty and a number of Volkswagen products, in the Mercedes E- Class, and you're going to start...

HOBSON: International Truck.

GARMAN: International Truck. I'm sorry that I forgot International Truck. And then you're going to start, for instance, in the DaimlerChrysler products, the Jeep Cherokee and the E-Class Mercedes, a technology called Bluetech, which is basically a urea- cleanup technology that we have helped develop to make diesels -- take all the performance value of diesel, all the efficiency value of diesel, but while cleaning it up to the standards of gasoline engines.

This is very important for us. And the question is, will consumers go for it? I know the chairman had very good experience, perhaps -- well, perhaps not -- with earlier-generation diesels.

And American consumers need to be reacquainted with the diesels and understand it's not the diesel that Chairman Hobson drove a couple of decades ago. It's a different car.

EMERSON: But you still didn't answer my question, whether or not biodiesel is part of...

GARMAN: Oh, biodiesel.

EMERSON: Yes.

GARMAN: Absolutely.

EMERSON: OK.

GARMAN: Biodiesel has a very important role to play, not only as a fuel in and of its own self, but certain biodiesels have the capability of bringing up the value, the (inaudible) numbers of the kind of diesel fuel we have in this country, so that they will work better in the clean diesel cars that are starting to come into the marketplace.

The European diesel fuel is just of a better quality than American diesel fuel, both from the cetane value and the sulfur. We're taking care of the sulfur, but we haven't taken care of the cetane, and certain biofuels can do a very good job as a blend agent, which can be very, very important in helping the biofuels market take off, because they are more expensive.

EMERSON: Do you feel like you've got sufficient resources allocated to continue development?

GARMAN: I believe we have a good program, and obviously, again, I'm here to support the president's budget.

EMERSON: But you could have a better program.

GARMAN: I think we're doing a pretty good job. Fundamentally, biodiesel tends to be more expensive. There's a certain tranche of biodiesel that you can get into the market using, you know, fats and greases from (inaudible) and animal tallow and some of the things that are relatively inexpensive.

But to really get larger market penetration you've got to get the soybeans and grapeseeds and mustards and the other oilseeds into the market going. And those tend to be more expensive and those processes tend to be more expensive. So we have some more work to do to take biodiesel beyond its near-term potential as just a blend agent and get it into the mainstream.

EMERSON: OK. Thanks.

Mr. Chairman, did I go past my five minutes?

HOBSON: (OFF-MIKE)

EMERSON: OK, well, then I'll wait for the next round. No, that's OK, I wanted to ask something about cellulosics, so I'll wait. Thanks.

HOBSON: Mr. Pastor?

PASTOR: Thank you, Mr. Chairman.

I apologize for being late, but I was at another hearing earlier, and hopefully I won't duplicate the questioning.

One of the questions -- well, there's an increased interest right now, at least in Arizona, probably the whole Southwest, with the technology advancing in wind energy. In China we have a number of American companies that are investing in the technology, the blades, et cetera.

I see that we've had a slight increase in this year's budget. We've gone up, down, up, down, up, down. I think we're up this time about 12 percent. What will be the emphasis on the wind energy investments for this particular year?

GARMAN: Currently we are working mainly on low-speed wind technologies, larger turbines that can generate power effectively in those low-wind-speed areas closer to population and load centers. That has been our emphasis.

We're pretty good at generating wind in those areas with high wind speeds, which tend to be places where people don't live. And to really get wind to grow closer to the market, because that just exacerbates transmission issues and some other things, larger and larger turbines appear to be both where the market is going and it's where our R&D is currently leading, and that has been our general emphasis.

That exacerbates the public acceptance issue in some cases, as the turbines do get larger, but larger turbines harvest more energy from lower wind speeds, and that's just the laws of physics that govern us and constrain us in this area.

PASTOR: Also, I see, I think there's an increase in solar energy, and in the past we seen at one time solar towers were popular, photovoltaic research, and we're back to photovoltaic in terms, I guess, more of commercialization. But you still need to have, I think, more R&D, in just how do you take that energy and convert it to power?

As you said -- I think I heard you say that we're not quite down there to encourage the public to say, "This is where I want to go."

GARMAN: You're right. We need both more R&D to work at a very fundamental level to continue the progress that we've made to get more efficiency out of lower-cost materials, number one. But we also need to work on manufacturing.

The fact is, we can build a much more efficient solar cell in the laboratory than a manufacturer tends to manufacture. So translating what's possible in the laboratory and the thermodynamic limits of how efficient a solar cell can be, getting that into an everyday manufacturing process that is dependable, that is replacatable, and so a manufacturer at a very low cost can manufacture photovoltaics by the mile in a continuous sort of process, that's where you kind of want to get to.

And some manufacturers are starting to do this today with amorphasilicon, with cadmium telluride, with these thin films. So I think that's the future, and we think that's how you get the cost down.

So there are fundamental R&D things that need to be done, there are manufacturing R&D activities that also need to be done, and we will be dedicating -- hopefully this summer -- a brand-new building at the National Renewable Energy Lab focused mainly on manufacturing of new solar photovoltaic designs.

PASTOR: Three years ago, four years ago, we were doing the roofing shingles. And that was...

GARMAN: We're still out there.

PASTOR: We're still out there, but...

(CROSSTALK)

PASTOR: But technology has probably advanced. In terms of the new films -- we're on concentrated solar one time, and then somebody comes in and changes it to photovoltaic, and then we go to the solar tower -- what I'm saying is...

GARMAN: We need to do both.

PASTOR: And you have industries that are developing, all facets of the solar industry, and money's invested here, and we're about to get there, and then the shift changes, or the shift occurs, so...

GARMAN: You're very right. Concentrating solar is an area where we used to invest, and we're getting back into the game. We got out of the game because we were given a National Academy of Sciences report that said essentially -- and I'm oversimplifying -- said get out of the game of concentrating solar power, it'll never pay off.

And we started to question that report. I mean, we did. We followed the guidance in the report, but then as we started to look more closely at it, and we did our own independent engineering studies and had third party entities do engineering studies, we said there is a future for concentrating solar, particularly in the Southwest, and we shouldn't abandon it. So we've been trying to build that program back up.

PASTOR: In the report, and I looked at it hurriedly, you talk about delivering electricity efficiently, and through the Bureau of Reclamation with WAPA, we've been involved in a product -- it's an alloy, it's a 3M product that we're investing in, at least in Arizona, and I think now it's going to California and Nevada -- that is able to transfer the electricity at greater speeds, greater quantities, and use existing infrastructure.

Are you involved in that kind of research or have you been involved in the development of this composite?

GARMAN: This is an area where -- I'll make a confession here, yes, this 3M composite ceramic technology is something that began as congressionally directed spending. It's a very good activity; it was an earmark, yes, as the chairman pointed out to me yesterday in our meeting, and it has panned out very well.

Kevin, do you have anything you want to add about that project?

KOLEVAR: Congressman, I would add that while we did support that R&D and we do think it's a very valuable project, the work at DOE has since ended. The product is on the market, not just in WAPA, it does see sales particularly in the Southwest because of its greater thermal capacity.

PASTOR: But WAPA is the one that right now is probably installing more lines. I think they're doing some in -- I think in Iowa. I know that there's interest now to take it from (inaudible) to Needles, California. We've done the southern Arizona route. And so it seems to be working.

KOLEVAR: It does work. There are still price issues with the product. It is the case that because WAPA is closely associated with the department, we're able to have productive discussions with WAPA and the other PMAs about instituting some of these more advanced technologies and integrating them into the grid.

But 3M is selling products into other utilities. They are still working on the pricing issues and do anticipate that they'll be able to make the lines more cost-effective than they are now.

HOBSON: Well, just very apropos that Mr. Latham is next up. You might want to expound on that a little more.

LATHAM: What, you mean the fact that it was my earmark?

(LAUGHTER)

HOBSON: DOE was exposed to it and didn't pick up on it, and so...

LATHAM: We had to put it in because the department would not look at it. You're right. It was a necessity.

Not to change the subject, and no earmark here, but Ms. Emerson brought up the subject about -- certainly on renewables using cellulose for ethanol production.

Can you just give me a broad overview of where we are as far as the research?

Your budget notes an increase in funding for research, but are we going to be cost-competitive with this production, or where are we right now? What have you found out so far?

GARMAN: True costs -- and of course, so everybody understands, we produce billions of gallons, about 4 billion gallons of ethanol from corn each year, and there are limits to how much ethanol we as a nation can probably produce from corn before you start running into other issues. So we want to look toward cellulosic ethanol production as a means to get up to as high as 60 billion gallons of ethanol a year into the future.

In order to do that we have to bring down the cost today at a pilot plant. At National Renewable Energy Laboratory every day we make cellulosic ethanol; make it out of wood chips, make it out of a variety of different cellulosic materials. But it costs us around $2 per gallon to make, which obviously, untaxed and unblended, doesn't fly.

We really need to get it down to around $1, $1.10 per gallon to make it competitive. A good ethanol plant today produces it at about 95 cents to $1 per gallon, a good, well-run ethanol plant. So that's the competition, and base price of gasoline is also a competition. So that's where we need it to be.

Now, we have some entities who believe they have processes that can get it down into the $1.30, $1.40 range, and they may indeed be right. And we have validated some of those claims.

So the point of the biomass activities in the president's Advanced Energy Initiative is to bring down that cost to $1.07 by 2012, and we think that with the program that we've laid out, we can do that.

LATHAM: OK. It's not for this committee to work on, but there are a lot of other crops. When you talk about corn, the stover, if you use those estimates, you know, 40 percent of the corn stover were used to make ethanol, you could eliminate about 25 percent of our imports.

But there's also probably more efficient ways with switchgrass and things like that...

GARMAN: That's right.

LATHAM: ...that we need to look at.

(CROSSTALK)

GARMAN: ... and some other feedstocks that are available.

LATHAM: And one problem, like I say, we're not going to address it in this committee, is in the current farm policy, is that there's no safety net at all for raising alternative crops. And so in Iowa, at least, we're corn and soybeans, because that's the only program crops there are. And we need to be able to diversify.

GARMAN: We are working with the Department of Agriculture through our Biomass R&D Committee, and we meet, and we've integrated our program with the Department of Agriculture so that...

LATHAM: And you are doing research then with switchgrass and other...

GARMAN: Well, we have not to date done much research. We've focused on corn stover, simply because we didn't have enough to do rice, straw...

LATHAM: There's a lot of it available.

(CROSSTALK)

GARMAN: But enhancing this program allows us to look at a greater variety of feedstocks than we've been able to in the past.

LATHAM: In your request, there's money there to build the first of three commercial-scale bio-refineries. Do you think it would be wise, possibly, to do more smaller-scale type bio-refineries to look at corn stover, to look at switchgrass, to look at rice, straw, whatever, rather than to just focus on (inaudible) 30-million gallon plant production is what the guess is. Wouldn't it be better to try a bunch of different technologies, and then there's a lot of private sector dollars out there available.

GARMAN: I think it's fair to say that perhaps we used to think that, and having had folks come to us and say, "We have a process using switchgrass, which you haven't been working that much on, that delivers a price cheaper than you can through your work at NREL," and have made these claims, which in some cases we have at least initially validated because they do appear to have processes and technologies and enzyme costs, and with feedstock costs and other all-in costs, that frankly look pretty good to us.

This solicitation is a means to spur us to say, "Let's give these folks who've been trying something different from us a chance to prove out." Because we recognize that every good idea doesn't come from the Department of Energy, and there are some other people out there doing some things, and we ought to give them a shot.

LATHAM: OK.

Thank you, Mr. Chairman.

HOBSON: I'm going to ask a short question that kind of leads into this.

I went down to a meeting at the White House. You weren't there, but the secretary was there, and they had all these people, and we were talking about energy sorts of things. We were talking about E85, and the availability of E85, and GM's got a million and a half cars out there, and trucks, so they can use it.

But the big problem that everybody seemed to be complaining about was the infrastructure problems. Naturally everybody wants to pick on somebody, so some of the members were saying that they believed in their districts, where they had a concentration of vehicles, that it was the distributors, big gasoline companies that had a problem with the equipment and the lines and things of that sort, that that seemed to be holding back E85.

Are you looking at any assistance, any technology, any way of getting the product, overcoming -- I guess right now they're except for maybe -- Sunoco used to have this thing where you could blend everything. But I don't know, there's like three -- generally you go to a gas station there are four things: You can get diesel, and usually now you can only get one grade of diesel; used to be two when I had a diesel car.

I had both an American and a German and neither one were any good at the time. I had to replace them both, as a matter of fact. I had a little BMW diesel and I had an Oldsmobile diesel.

But, you know, there are only four places in most pumps, so what are we going to do to get this product out there? It seems like people are interested. I don't know.

Do you all get the same...

GARMAN: Yes. Our capacity to put flexible-fuel vehicles on the road that burn E85 exceeds our capacity to supply them with E85. It's a relatively easy thing to make a vehicle E85 compatible. It's unit cost of under $100 per vehicle.

HOBSON: Is there any automotive company besides GM doing that?

GARMAN: Oh, yes. Ford is offering 250,000 vehicles this year; GM's offering half a million vehicles this year. All of their heavy vehicles will be E85 compatible. So as we sort of map out the strategy, we see that there will be more vehicles on the road than there will be product.

And so one of the provisions in the Energy Policy Act was tax incentives for fuel vendors to convert to E85. That's one short-term step. But one of the things that we've been doing -- we have met with the major fuel suppliers, retail fuel suppliers on this subject, and the secretary has met personally with some CEOs about this, encouraging them, and they're willing and interested in doing it. They have some legitimate issues. They want to make sure, you know, if it's going to have their brand on it, they want to make sure that it meets their qualifications.

What a lot of retailers are doing is converting the mid-grade pump to E85 in those areas where E85 is available. And it's a relatively simple, easy conversion of cleaning out the tank and replacing it with the new product.

HOBSON: But you've got to have enough people to make sure that they're using that pump.

GARMAN: That's right, and I think what you see, for instance, one of the other problems we have is a lot of consumers are driving around in flex-fuel vehicles and don't know it, which is why you see GM pushing the yellow cap and the Go Green, Go Yellow campaign.

HOBSON: Just be careful when you do that, because the green pumps in a lot of places are diesel.

GARMAN: Yes, sir.

HOBSON: And if you're ever done that -- been there, done that once; my family still kids me about it. I got home, but I didn't get much further than that before we had to clean out all the gunk. So when you say "Go Green," make sure if you're using that that you don't put diesel fuel in a gas engine.

This is a problem we've got to work on, because I think the public -- just look at the number of people who are here at this hearing today. If we had this hearing two years ago, you don't have near the number of people show up. So it's obvious that we're entering a new era here, and there are some simple things we can do.

Frankly, if California hadn't -- I'm not a big fan of California on a lot of things, but the one thing California did do, and a lot of people complained about it, when they put this mileage research into California, it got a lot of people to wake up. Took a while for the domestic companies to wake up, but the Japanese companies got into it really fast, and then everybody else was getting into it.

This time, I think it's getting better, and people are getting better; the hybrids are coming. People are getting into it. I drove a hydrogen car today and unfortunately the technology is not developed in this country for that car.

It's a GM car, but the guy spoke German who was in the car with me. He spoke English too, but. It's an Opel, but they're going to have a domestic one. And we need to move more in this, but in that case you're going to have to fill it up with hydrogen every so often. Where you going to do that? And right now they don't go far enough.

But the E85 seems so simple that it seems to be a way to get there. I'm going to stop and let other people -- the other thing, pickup trucks.

I went four years ago, over here, International Truck got an award, from, I think, you guys, for a diesel truck that you could take your white shirt off -- I didn't do mine; I did somebody else's -- and you could put it up against the tailpipe and it didn't get like if you'd do it to another truck, it'd have gunk all over it. It didn't.

But getting that into the marketplace and getting acceptance and getting the pricing done is a lot more difficult than just getting the technology, so these are things we've got to work on.

GARMAN: Right. And one other point on that, because it's very important: It's not just the truck, it's the fuel. That truck depended on a low-sulfur fuel...

HOBSON: It was only in California, I think, at the time.

GARMAN: And now with the new 2006 EPA fuel standards for diesel, we have that low-sulfur fuel coming into this marketplace around the country, and thus that's another enabling mechanism that helps us get that into the market.

HOBSON: OK.

Mr. Simpson?

SIMPSON: Thank you, Mr. Chairman.

I have four questions. I guess what I need to know first is, could you briefly -- real briefly -- tell me how your budget is developed within the department and within the administration? Are you given a number that says you have to stay within this?

GARMAN: We are given a target, but we blow by the target.

SIMPSON: And then they come to you and say...

GARMAN: Yes, sir. In the spring we develop -- we have started developing our budget for 2008. The secretary, the deputy secretary, the undersecretary and assistant secretaries all participate in this process. In September, we send a budget, or thereabouts, to the Office of Management and Budget.

Around Thanksgiving -- they always manage to ruin our Thanksgiving -- we get our passback. And then in the period after Thanksgiving and into December we appeal their cuts to our budget. Sometimes we prevail and sometimes we don't.

And then the budget gets locked down sometimes in December, January...

SIMPSON: The recommended cuts to the budget that they make, are they program-specific or are they overall? You're not going to have $27 million, you're going to have $25 million?

GARMAN: They are program-specific on this side of the table. In NNSA they tend to be a little more flexible with numbers, but with the people you see, the managers you see, sometimes the OMB guidance is excruciatingly specific.

SIMPSON: OK.

GARMAN: I'm probably going to get in trouble for this.

SIMPSON: Well, I was curious as to how it is developed and why some of the recommendations you look at -- you know, the president has been pushing the hydrogen initiative and so forth, but the funding for the hydrogen initiative is down in this requested budget.

GARMAN: No, sir, the funding for the hydrogen initiative is up in this budget. We are consistent with the president's...

SIMPSON: Everything else is down. Is that right? I'll have to look at it again. I'll trust you; I always trust you.

You're going to get into GNEP; you've got $250 million you're going to put into there, so obviously you have to find it somewhere else. You have to find cuts in other things.

And a couple of the things that bother me is when I look at the infrastructure budget and what you've done there, and if we're going to develop the lead nuclear lab in the world, those types of things, one of the most important things is to have the research facilities and stuff for these people to work in as we try to attract the best and brightest scientists from around the world to come and work here.

I'm concerned about the facilities budget, and I assume that to look at putting $250 million into GNEP, we decided, "Well, we'll take a little bit here; we'll take a little bit here." And the second question along that same line is consequently we took out the funding for the University Reactor Infrastructure and Education Assistance Program.

I'm very concerned about the future of having nuclear engineers and engineers in general as we redevelop the nuclear industry in this country, and then we take out the funding for the education part.

GARMAN: Let me say a word about the education initiative -- and this is one of those instances where we think we can declare victory. There was a time when we had gotten to the point where we had zeroed out nuclear energy R&D, the R&D portion really to zero, effectively, in the late 1990s.

And at that time, you were lucky to find a nuclear engineer anywhere in graduate or undergraduate or postgraduate work.

That situation has turned around, and we have met our goal of how many engineers, and frankly with what's happening in the marketplace and how many folks are positioning themselves to build nuclear power plants, we think that we can declare victory on this particular aspect and move on.

HOBSON: Could I interject here for a second on that? You need to talk to Mrs. Biggert about that.

GARMAN: Yes, sir, I understand.

HOBSON: And you need to talk to the Navy. I mentioned this yesterday with the secretary when I was down there and you were there. The Navy didn't quite share that same view.

SIMPSON: Yes, that's right. I talked to them the other day. The other one was infrastructure facilities.

GARMAN: I too am concerned about infrastructure and facilities, and particularly at the Idaho lab. Frankly, we got so far behind the curve on that lab. And when I go to that lab and I see R&D, good R&D being conducted in storefronts, it's not the kind of world-class capability that we want to build there.

And it's going to take us a while to dig ourselves out of that situation and...

SIMPSON: Do we know when EM's going to take over the legacy buildings?

GARMAN: Off the top of my head, I'm going to have to get back to you on that one.

SIMPSON: OK. I've got two other questions I'd like to...

VISCLOSKY: Would the gentleman yield just very briefly?

SIMPSON: And by the way, I just want to tell you that you're right, the hydrogen technology is up. You know your budget better than I do. It's the nuclear part that's down.

VISCLOSKY: Getting back to the students that Mr. Simpson raised. The increase in student population, are those native-born Americans or are those foreign national student wishing to come in and study?

GARMAN: I don't know that we collect that data. Anecdotally, I think I've seen what you've seen.

VISCLOSKY: What have I seen?

(LAUGHTER)

GARMAN: When I go and stand outside the mathematics and hard sciences building at major universities, I see a lot of foreign students going in and out of those doorways, and I don't know that we collect information on who these students are, but maybe we do. But if you want I can try to develop some information and get back to you on that.

VISCLOSKY: I don't want to take any more of Mr. Simpson's time, but I would think that's an important principle, given all of the range of security issues, economic issues and energy issues that involve the use of nuclear energy. And if what you're seeing are foreign nationals in our nuclear engineering programs, then the department ought to think about whether or not there should be a policy of the United States government to help effect...

(CROSSTALK)

GARMAN: Let me clarify. I'm not seeing foreign nationals in our nuclear programs. Math and hard sciences, anecdotally, yes; nuclear sciences, I don't know, and I will get back to you on that.

SIMPSON: I would note that what the Navy told me is that they don't really care if they're nuclear engineers or not -- they get a good engineer, they can train him to be a nuclear engineer. So we ought to look at all of that engineering program that we have.

A couple other questions, quickly. You mentioned that we need to get honest about cleanup. I think you said your comment was we need to get honest (inaudible) and it was looking at re-negotiation of state settlements and stuff.

Do you have any plans to renegotiate settlements?

GARMAN: No. When I said we need to get honest about our cleanup, I was asked, "Does that mean renegotiation?," and I said not necessarily.

It is important that the department -- and this is something that Secretary Bodman drills us on every day. We as a department have over-promised what we've been able to accomplish and the timeframe that we've been able to accomplish it.

Tomorrow this committee will have a hearing on the waste treatment plant, which is probably a poster child for what was accomplished, at what cost and in what timeframe. That inevitably gets us into trouble, and we find that the best cleanup relationships we have are when we approach states as partners and they understand the difficulties we face, and we make them a part of it.

Sometimes when we miss a milestone -- which we never like to do, but it happens -- and the state understands it, and if they're a part of it, they understand it and they let us move that milestone. If we get confrontational with states or try to dictate what is going to happen in the pace of cleanup without their cognizance and collaboration, that gets us in trouble.

(CROSSTALK)

GARMAN: When I talk about the context of being more honest about our cleanups, that's really what I'm talking about.

SIMPSON: OK, I appreciate that. I agree with you. Unfortunately, sometimes things get reported to the press, and you know how everything goes to hysteria, and we spend days responding to constituents and interest groups and everything else.

The other question I want to ask you -- about a month ago, I talked to Secretary Bodman when he was here, and I asked him to provide me with all the correspondence between DOE headquarters and the contractors regarding communications with their employees, the press, the public and Congress.

What communications have you had with the contractors, and have they been given any restrictions on contacting members of Congress in terms of time or anything else, about what they can talk to members of Congress about, or anything like that?

GARMAN: Not that I'm aware.

SIMPSON: You haven't sent out any memos to any DOE individuals -- 72-hour delay -- they have to have the information to you 72 hours before a contractor can talk to us or anything?

GARMAN: What we try to do -- you're triggering something in my mind -- we try to have 72-hour notifications so that our congressional affairs people can contact members of Congress on things that are coming up, because we don't want you to be surprised. We don't want contractors to notify, for instance, people of an impending proposed layoff of workers and have you read about it in your local newspaper.

We think you need to hear about that from us. So this could be what you're referring to, and I'll make sure that what the secretary promised you we'll make sure we'll get to you, but our intent is to help make sure that you're not surprised.

We're not trying to cut off the flow of information between the contractor and you; we are trying to manage the flow of information in a way that folks don't get surprised.

SIMPSON: I appreciate that, but I think it's being perceived out there in the real world as...

GARMAN: As if I need to go to Idaho...

SIMPSON: It's not just Idaho, it's other states also. Which have the perception that they've been told -- contractors and so forth -- that they have to notify the department 72 hours before they can talk to us or anything else, and I think it's kind of a culture that's within the DOE.

I understand that you don't want them to go out and hold a press conference and you turn on the news and go, "What the hell is this all about?" You know?

You guys have to know this. This is your department. But contractors need to be able to contact members of Congress to talk to them about the job that's going on out there, what's going on, what they see as potential problems coming down the road and that kind of stuff, so that we can work cooperatively.

You know, Mr. Chairman, I look at what's gone on at Hanford, and I wonder if some of the contractors at those times could have contacted members of Congress and let them know what they saw as a potential problem here, if maybe Congress wouldn't have gotten involved sooner than tomorrow with what's going on there, and maybe been able to avert some of these costs.

I want to open communications between the department, between members of Congress. And we've always had a great relationship. Whenever we've contacted you and wanted to know something, I think you guys have been very forthright in coming to talk to talk to us. But we do have contractors that also need to come and talk to us and sometimes...

GARMAN: Let me revisit this and work with you and your staff and help us fix this perception.

SIMPSON: I appreciate it. Thank you.

HOBSON: Mr. Frelinghuysen?

What I'd like everybody to do, if you've got two or three questions, ask the three questions so that you can answer them back, so we can get another round in. I haven't even gotten to my GNEP questions yet, which is going to take a little while.

FRELINGHUYSEN: Mr. Secretary, I want to talk a little bit about -- can I tell my constituents -- I'm never quite sure -- the department's made significant investments in upgrades in the nation's electrical power grids.

How would you actually characterize where we stand nationally? I know we've been working on developing new technology for storing energy, ensuring more reliable transmission. I come from the Northeast. We don't ever want to see a catapulting situation like we had a few years ago, where everything sort of went down.

Where do we sort of stand? And it's my understanding that FERC is working on a case-by-case basis with states and utilities on grid upgrades.

Obviously that may be a necessary task, but who actually has control of the whole picture here, with increasing demand for electricity? How would you characterize where we are? And who really has done a thorough investigation of the overall power grid situation nationally?

GARMAN: The department, a couple years ago, in response to a national energy policy requirement, completed its first national grid study, where we looked at the total grid, its weak points, its bottlenecks. And we've done a variety of things in response to that, and the Congress has done a variety of things in response to that.

Overall, I would characterize our grid as still underinvested because of an uncertain regulatory regime in many areas of the country, with respect to how electrons are going to be moved around and how people are going to be able to make a buck investing in new transmission.

We have not invested sufficiently in transmission capabilities to make this a grid worthy of a 21st century digital economy, to say that. And getting the regulatory regime clear in the Energy Policy Act was very important in doing that.

Some of the things that Mr. Kolevar is involved in in his office, in terms of working with FERC on issues such as transmission corridors, and designating national transmission corridors, is very, very important to that ongoing activity.

FRELINGHUYSEN: So in terms of sort of the assurance we're looking for here -- obviously you've got a consolidation of companies and mergers; obviously the larger companies hopefully bring to the table more assets; I assume that they're doing quite a lot of stuff on their own. How would you characterize where we are?

And is there a vision? That's sort of what's driving my question here.

GARMAN: I'll start with the first question. While there are some utilities that have underseen upgrades in their systems, whether they're control systems or some other actual line, I don't think it would be accurate to say that today's grid is substantively different from the grid that we had in 2003 when we had the blackout.

We do have difficulty and see difficulty in seeing new technology pushed into the grid. Much of that was because of the regulatory uncertainty that companies face when considering such investments, and because of the ongoing reliability responsibilities that they have. It is a very different matter to put new technologies, which many will consider to be untested, into a grid, if the possible result is the loss of power to your customers and a resulting pushback.

All of that said, we do think that we are on the cusp of seeing some significant changes in the ability to deliver power in the grid and in the technological underpinnings of the grid.

Those are going to be, I think, due in part to some of the research that the Department of Energy does, but candidly I think it's going to be due much more to the passage of the EPACT 2005 legislation, and the repeal of PUHCA, which now gives utilities the ability to look into contiguous service areas for expansion, acquisition and increased efficiencies that result from that and from the actions of the Congress to give the Department of Energy in partnership with the FERC the ability to actually see when there are extreme circumstances, severe congestion, a means for the development of new transmission to address that congestion.

And I think that's been demonstrated really in the last six weeks with the announcement in the East Coast -- the region that we're in -- of two major transmission lines, AEP's line and the Allegheny line, with a proposed timeframe of about 10, 11 years out, but a total price tag anticipated to be about $4 billion.

FRELINGHUYSEN: Well, there's a lot of money, and we can actually have some pretty catastrophic things happen -- really, what you're saying isn't really reassuring. We're not really much better off than we were in 2003. I'd hate to have us visit, not just in the Northeast but in the other part of the country, the same sort of dysfunction that people in general view our handling of Katrina.

Just to think that we wouldn't be able to move with some agility and responsiveness here -- you're saying we're making some strides, but I think we all would like to have a higher level of confidence.

This is pretty basic. I think we're all interested in new investments, and maybe some of the things that we've laid down, that you've sort of described.

GARMAN: Much of it is, as the undersecretary mentioned, is the result of the regulatory regime. These utilities...

FRELINGHUYSEN: People don't want to hear that.

GARMAN: No, sir. But these utilities are limited in the rates that they can charge by the FERC. And for that reason the business cases that they need to develop for investment in upgrades in the grid within their system, investments in upgrades across systems, in past years has been particularly difficult to make...

FRELINGHUYSEN: We hope somebody has the big picture, because in reality if FERC is sort of working state by state, I assume somebody over there has sort of the big picture in mind, as well as the department.

GARMAN: The department, two years ago, did a cooperative effort with FERC and industry, developing kind of a concept piece called Grid 2030, which did look out to the future to see what the experts in the field thought a grid would look like, and then began to develop a road map for getting to that grid. There had been discussions about upgrading that piece of work, because just in the last three years, and the passage of EPACT being the most significant action, that may well impact what we expect the grid would look like in 25 years.

FRELINGHUYSEN: 2030 is a long way off.

GARMAN: Yes, sir.

FRELINGHUYSEN: Something could happen this year, and we would be pretty well damned if there hadn't been some improvements in the overall -- not only technology, but in terms of capital improvement.

Thank you, Mr. Chairman.

HOBSON: Mr. Rehberg?

REHBERG: Mr. Chairman, I just want to express my displeasure as well with the zeroing of the funding of the oil and gas R&D. I, in fact, use you guys as a bad example, so you do serve a pretty good function. When the president asks me for my support for line-item veto, I point at this program as a reason why I won't legislatively support a line-item veto in Congress.

Because I think it's a terrible mistake, and if that's the kind of decision that's made somewhere along the line, whether it's OMB, Department of Energy or the president, then I'm not willing to give my vote to a president that doesn't recognize the value of a program like this.

Specifically, my question is: We kind of find ourselves in a unique dilemma in Montana. We have oil and gas wells, especially oil wells in Richland County, being drilled like crazy. We have domestic production going, but we don't have any pipelines to get them out.

There's a pipeline that comes from Canada that goes right through; we don't have access. I guess the question is: Is oil covered under NAFTA, do you know? If we want to lessen dependency on foreign sources of our energy and we're trying to do that in Montana and we drill them and have to cap them, that doesn't seem to make sense to me.

Is there any way we can -- legislatively or through DOE -- highlight the fact that we do in fact have domestic sources ready, willing and able? We're already permitted; they're drilling them. We just can't get them out.

GARMAN: When oil prices are at $67 a barrel, it's hard for me to understand why someone with a producing oil well cannot move that product. I can't explain it. I can't understand why that would be the case, and I would need to have a better understanding to...

REHBERG: Well, first of all, we can't move it because in Montana, my district spans the distance of Washington, D.C., to Chicago. So you're not going to truck crude oil out of Montana because you just can't do it. And so we have one pipeline going through the region that comes from Canada, goes right by us, and we can't put anything into it.

It seems to me like...

GARMAN: The Federal Energy Regulatory Commission would regulate both the pipeline tariff and access to that pipeline for the interstate movement of that product, so we might want to...

REHBERG: Can there be an American-first on the pipeline going through America or it's owned by a company and we don't have access because the company owns it?

GARMAN: We generally try not to intrude into the market decisions because we found in the past when we've done that, we've created more problems than we've purported to solve.

REHBERG: Do you see the irony, though?

GARMAN: I do. I very much see the irony.

REHBERG: We're drilling the wells. We have domestic production and now we're capping the wells. We can't move it.

GARMAN: It's somewhat analogous to having the wind resource on the mountaintops but a lack of transmission to move it to where it's needed.

REHBERG: OK. I was hoping you had some magic bullet. I guess not.

HOBSON: Well, we need to look at that, because when I was in the legislature in Ohio, we had a similar problem and we forced the utility companies to take domestic produced -- we were looking at natural gas, mainly, and they put a tariff on it and put it in their lines.

And we actually did that. I don't know if that's a FERC problem or -- but I think it's something that if you guys could look into it and come back to us, I think we have an interest in seeing these assets are properly used.

I don't know whether these are deep wells or shallow wells, or what they are, or what the capacity of the wells is. It may be that because of the capacity and the life production of the wells that it doesn't generate enough to...

REHBERG: No, these are huge. These are big wells.

HOBSON: Well...

REHBERG: Part of the problem, Mr. Chairman, as well, is there are different qualities of crude, and so the Canadians are happy to mix their lower-quality shale crude with our very high quality. It averages the price so they don't have to pay as much. So it's either all or nothing and it seems that the Canadians are holding us hostage, which isn't the whole idea of energy independence as I understand the president's proposals.

HOBSON: Well, maybe we ought to look at this.

GARMAN: But this also sounds like something we might want to try to -- we do have a North American Energy Working Group that we at the department work on, and that may be a venue through which we can address this issue.

HOBSON: So why don't you have somebody look...

(CROSSTALK)

GARMAN: Yes, sir.

REHBERG: Could you have them contact me and how I can get interjected in the discussion with your working group?

GARMAN: OK.

HOBSON: Ms. Emerson?

EMERSON: Thank you, Chairman.

Can I just ask a follow-up from your discussion with Mr. Latham on cellulosic, just because I want some clarification. I met a couple of weeks ago with the director of NREL to talk about some of the things that they were...

HOBSON: NREL?

EMERSON: NREL, the National Renewable Energy Lab.

HOBSON: OK, not Enron. I just wanted to be sure.

EMERSON: For the record, NREL, N-R-E-L, Chairman, thanks.

But, anyway, I need to get a sense from you about how serious the research aspect is of cellulosic; in other words, we have three pilot projects going on, and are we doing things in cooperation with the private sector? Because it would seem to me that you would be wanting to test, you know, obviously corn straw on the one hand, or maybe rice straw on the other hand, or wood chips, and compare them all.

How's it working?

GARMAN: Yes, I would make a couple points. Number one, 65 percent increase in the funding that we're seeking for this program -- that's in a flat-budget environment, in a flat department budget; that is a significant investment.

Number two, yes. It is both an R&D and a technology demonstration challenge. We need to continue R&D, and in fact, we need to continue R&D into some new and novel technology, and that's why I go back to the Office of Science involvement in our activities.

We have a plan through incremental improvement in existing technologies, sort of an engineering plan, to bring down the cost of cellulosic. But there may be completely different, novel and revolutionary ways to do the same thing; say, using microbes, maybe even using genetically modified microbes to do in an organism what we're currently doing in a large plant with lots of steel and concrete and enzymes and vessels.

So we think that both through what we're doing and what we have the capability of doing in the Office of Science -- we're going on sort of the safe pathway, you know, plotting along to hit that target in 2012, but we're also looking at a revolutionary, fundamentally, radically different pathways as well, which may pay off.

It'll probably be a longer payoff, but we think this is so important and has such potential that if we can do things like turn urban municipal solid waste into a liquid fuel that can help us reduce our dependence on foreign petroleum, it's worth doing.

EMERSON: I don't disagree, and I'm pleased that you all have increased the budget 65 percent. It's just that lots of us get antsy. It was funny, when the director of Science -- was it last season, Dr. Orbach?

He said, well, you were really the guy to talk to about this issue. Anyway.

GARMAN: We're working together. This is a new thing for us. We're breaking down that barrier.

HOBSON: Working together is a new thing for you?

GARMAN: I have to confess, yes, sir. I don't want to diminish the barrier that has existed between the basic science programs and the culture that's existed there.

Frankly, their orientation is often fundamental research and will I get a Nobel Prize and can I publish a paper? And our orientation is let's do engineering technology advancement that makes a difference to real people.

And merging those two cultures is what we're doing, and some folks have proposed things like ARPA-E to do that. We're not waiting for that. We're doing it.

We're going ahead, we're doing that, we're working together to manage a single comprehensive portfolio across those stovepipes.

EMERSON: Well, I thank you very much.

Thanks, Chairman.

HOBSON: Mr. Pastor?

PASTOR: As you increase the budget for R&D and try to find a solution, I think you increased by $59 million, you increased for biomass and biorefinery already, which I congratulate you for, and I agree with you that you have to do that.

But then in turn, you cut the state weatherization programs by $78 million, and you begin to wonder, because this is energy efficiency. The states have proven and shown that that's a good way to save energy, and so we wonder: Are we further ahead or are we in the depths of the situation?

GARMAN: Let me try to address that this way.

PASTOR: Please.

GARMAN: Low-income weatherization is a program that we're not doing away with, we're scaling back on it a bit, or we propose to scale back on. Instead of weatherizing 90,000 homes next year, we'll weatherize 60,000 or something like that. Weatherization is a program -- it's very dependable; it's very low risk.

I know it's going to have a return on the investment. We're going to get a couple of dollars worth of value for every dollar we invest. Previously we've been satisfied with diversifying our investment portfolio among these higher-risk, higher-return investments, like cellulosic ethanol.

Having that along with a low-risk, low-return, such as low-income weatherization, what you're seeing is a proposal. And, frankly, that's kind of how I briefed it to the secretary the first time we talked about it. I said, Sir, we have a balanced portfolio: high risk, high return, low risk, low return, but still very important.

But that weatherization program, it's like a T-bill; I want it in my portfolio because it's going to have a return. And frankly, the secretary said, I want you to pick winners; I want you to invest in things that are going to pay off.

PASTOR: Well, we hope they pay off.

GARMAN: And there is a certain risk entailed in a strategy that's oriented this way. So that's the flavor of the tradeoffs. We know from National Academy of Sciences studies that our energy R&D programs -- some of them pay off 30 to one.

A tiny $15 million investment in low-e windows, for instance, has benefited the nation tremendously. And some of these R&D...

PASTOR: Well, let me ask a question. Now I understand the rationale, but why don't we go dollar for dollar?

GARMAN: In a perfect world, yes, sir. I'd love to spend more on everything. I'd love to spend more on weatherization and more on things like cellulosic ethanol.

But I would submit that's not the world we live in, and it's not the world you live in, either. We have constraints.

PASTOR: I understand you have constraints. I know.

GARMAN: I'd love to.

(CROSSTALK)

PASTOR: I know you have constraints, and I think there are solutions to those constraints, but obviously this administration may not want to look at them, and I understand why you have to make these decisions, because you work for the administration.

But there are some of us who say IRS is going to pay a private company to collect IRS dues and get 25 percent on the dollar; it would be cheaper to hire a couple federal employees and collect more.

We're constrained. Constraint also causes us to make some decisions that may not be in the best light. I'm just pointing out that here is weatherization, a program that saves energy, and people are benefited by it. And I agree that you need to take some time to invest in high-risk propositions.

Obviously, there are ways to remove the constraints.

Last year we had an issue, and I think all of us here have expressed an interest in processing spent fuel. I think the subcommittee put in $50 million to begin looking at what we could do, and I think there's a consensus of this subcommittee to have a balanced portfolio.

We have to look at nuclear energy, but dealing with waste material is a major obstacle right now, so this subcommittee put $50 million. What's the status of it now? Where are we?

GARMAN: Yes, sir. I'll ask Dennis to follow up. We've taken that guidance very seriously.

We have solicited expressions of interest from communities who are interested in hosting such facilities, and we did get quite an overwhelming -- I think it's fair to say -- response from those communities.

Dennis, do you want to add anything?

SPURGEON: I think we have something like 40 responses which have just come in. That just happened at the end of this past month. So that is moving forward, and we were very gratified to see that we got that kind of response.

I think one of them was even from Nevada.

(LAUGHTER)

(CROSSTALK)

HOBSON: I'm going take some time. Everybody's had two rounds and Pete and I have an interest in GNEP, so this is going to take a little while. But I think it's important that we get out some discussions on this.

The subcommittee last year helped stimulate the department in taking a fresh look at recycling spent fuel. However, we also articulated two key principles that must be followed for recycling initiatives to be successful in the United States. There must be a voluntary competition for selecting one or more sites for recycling facilities.

They are not forced on unwilling communities. The various recycling facilities must be co-located into an integrated recycling complex. We had one other thing -- I thought they should be done probably at licensed DOE sites already for security reasons; we don't have to reinvent the wheel.

It may take longer to do, and I think there are communities out there that would do that. I've got several questions related to these principles. It's not clear if the department is following our guidance in the GNEP initiative.

How long have you been there?

SPURGEON: This is my third day.

HOBSON: Well, you're going to get an education on this, maybe. And I think Mr. Garman may...

(CROSSTALK)

HOBSON: I don't want to put you on the spot on this thing. I think Mr. Garman knows most of this stuff. Let me talk about it for a minute.

Let me run through a couple of these things, and then you can see where we are on this. There was a report in Energy Daily in mid-March in which DOE officials confirmed they were looking at using the F Canyon at the Savannah River site for some or all of the GNEP facilities. Please explain how such a backroom deal with the Savannah River site is consistent with our guidance that any recycling facilities must be competed.

Has the department made any commitment yet to Savannah River regarding GNEP facilities?

GARMAN: No, sir. I'm not aware of -- well, you've got something in your hand where you're going to get me, but...

HOBSON: It's a March third letter -- subject: engineered scale demonstration in support of the Advanced Fuel Cycle Initiative. And it's signed by Jeffrey M. Allison (ph), manager, head of contracting activity. Have you seen that? Or do you want to see it?

SPURGEON: I have to say that sitting right behind me is the man who I'm working with as I come on board, Shane Johnson, and...

(CROSSTALK)

SPURGEON: I believe that's program development money, sir, for developing...

HOBSON: Well, I'd like somebody to look at this letter and get back to me on it.

SPURGEON: I'd be glad to.

HOBSON: I'm also puzzled by the recently issued request for expression of interest for the GNEP Technology Demonstration Program. This solicitation appears to follow our direction regarding competition, but it violates the guidance that recycling facilities must be integrated. The solicitation only mentions three components: the separation step, the conversion step and an advanced fuel cell facility.

There's no mention of the process storage of spent fuel that must take place at any integrated recycling facility. Why does this solicitation make no mention of interim or process storage as a key component of an integrated recycling plant?

GARMAN: Right now, Mr. Chairman, we don't believe we have the legal authority to undertake commercial interim storage. Were we to avail ourselves of the authority provided to us in the Nuclear Waste Policy Act, we would have had to start undertaking activities, it's my understanding, in the mid 1990s.

Now, I agree that in the perfect world the integrated vision that you have in mind is what makes sense from a technical and engineering point of view.

HOBSON: But let me mention -- the secretary, when he testified, said that he thought they did have to take -- and this is a demonstration -- he thought that they could take small quantities for storage in one of these particular facilities to do that. But I understand the difference of opinion on...

GARMAN: We think under the R&D provisions and our organic authorities, yes, we could take very small quantities of commercial spent fuel for demonstration and technology purposes, is my understanding.

HOBSON: Well, let me go on with this. If a candidate site has stated that they refuse to provide interim storage, even under these circumstances, as we understand the Savannah River site has stated, then that site should be eliminated from further consideration of the GNEP program. Where is your guidance to candidate sites regarding the necessity of accepting interim storage at a precursor to the other components of an integrated recycling facility?

Let me go ahead on something.

GARMAN: I hear you.

HOBSON: Because this is a whole litany of stuff here. A major concern to this subcommittee is whether the Nuclear Regulatory Commission will be able to make the Waste Confidence determination necessary to license any new reactors, especially when Yucca Mountain is years away from initial operations but, frankly, is already full to its authorized capacity as you look at the fuel that's stored.

Let me go through a number of things here. Does the administration believe that the GNEP initiative alone provides a significant future path for spent fuel to allow the NRC to license reactors? Two, if GNEP alone is not sufficient, what other steps are necessary to allow the NRC to reach a positive waste confidence determination to support the license of new reactors, which we want, the Senate wants?

I think right now is a wonderful opportunity that we may miss if we don't get this straight. What is the proposed engineering-scale demonstration project for the UREX Plus B facility in which users can test our various spent fuel elements and experiment with the UREX Plus separation process?

Let me go on. I've got three more on this page.

GARMAN: I'm worried about this being in digestible chunks.

HOBSON: Well, this will be one and then I've got another question on it. But if this will be a user facility, then are you aware of the statutory requirements imposed by Section 307 in the Energy and Water Development Appropriation Act of 2006?

Before you proceed further in your planning for the engineering- scale demonstration project, I think you guys ought to look -- on the competition requirements, what is the specific spent fuel that will be processed in the engineering-scale demonstration project, and will the department follow the established cue for the acceptance of spent fuel, or do you plan to take spent fuel in some other order?

I'm going to give you this so you can look at it. We've got a big program here, and I'm concerned that we're going to get off on the wrong foot on this and then we're all going to be poking at each other, which I don't want...

GARMAN: No.

(CROSSTALK)

GARMAN: That never turns out very well for us.

HOBSON: Well, it doesn't us either, really.

GARMAN: Let me say a couple of things, first of all, about the importance of interim storage. You've pointed out -- and I am not an expert, but it makes sense from an engineering and technical point of view to have interim storage co-located with an eventual recycling facility. That seems clear.

Now, when we're in the context of an R&D project, to prove out the engineering -- our ability to scale up these components to an engineering scale and make them viable, and to prove -- because we need to prove that we can do this not on a kilogram basis, but on a tons basis.

HOBSON: But you're going to have to store it for a while.

GARMAN: And the point is taken. But, again, we may have the ability to take a certain percentage of it, but...

HOBSON: Savannah River said they're not going to store.

GARMAN: I take that back.

HOBSON: And you're going to put tons of stuff down there to do your demonstration project; they made some side deal here. How are you going to make that work if they say, "We're not storing"?

GARMAN: I...

HOBSON: Are you going to do 30-day deals for your...

(CROSSTALK)

GARMAN: No, sir.

HOBSON: Thirty-day contracts or something...

(CROSSTALK)

GARMAN: There really should be a package deal that makes sense, and folks should know that if they're going to get a large activity -- and we're talking about some time in the future, where this actually comes to fruition. But I take your point. You've stressed the importance of interim storage, which we understand.

HOBSON: Even in this demonstration run-up, you're going to store -- and it isn't going to be six months. It's going to be probably years. I don't know whether we're trying to inch in the door and then say, "Look, it's there, sorry."

We just need to be up front, and people need to understand what they're walking into when they get into this.

GARMAN: Yes, sir.

Dennis, do you have anything you want to add on this?

STURGEON: Well, I think that's something that we obviously need to make clear in subsequent responses and a potential RFP that might go out later. So I take your point and I'm certainly a strong supporter of having interim storage on the front end of an integrated recycling facility.

Let me just take that as an action item to get back to you to ensure that that's taken into consideration, that we don't go too far in engineering scale without having that answered.

HOBSON: All right.

Under four there, do A and B.

GARMAN: Now, you asked about the Waste Confidence issue, and it is very important, as you pointed out, that the NRC have waste confidence in a variety of different ways that we can do that. But we are sending up, I'm told, or we sent up at 9 o'clock this morning, legislation to address, among other issues, the waste confidence issue, as well as a few other issues, such as land withdrawal, capacity at the repository, how the waste fund is treated, and other regulatory steps that we think are very important.

So we want to deal with the waste confidence. To answer your question directly, no, GNEP does not provide by itself -- of course, waste confidence is an issue for the NRC, and the NRC will determine that on its criteria.

But GNEP is not designed to satisfy the waste confidence issue by itself. It is at this juncture an R&D program to help us prove out that we can do what we say we think we can do.

HOBSON: I'm going to let Pete go, because he's got a very important point here. When you start down a road on here, you're setting some standards that everybody's going to look at as to what the future's going to be and how it's going to be configured, so you need to be careful.

We made a recommendation that nobody followed when we sent this up, and there's already a news article out this morning -- I don't know if you had seen it before you came or not -- that says this is dead. And Pete's going to tell you from his perspective why he thinks it's got a problem, and I happen to agree with him.

Before you answer the other one, this is important on this, since you talked about what you sent up.

VISCLOSKY: Mr. Chairman, thank you very much.

I just want to reiterate the chairman's position on interim storage. I, Mr. Garman, took you task earlier about language that was used by the department, and obviously we have other questions about that, and that's fine.

I'd make it clear here that we all, I believe, have the same goal, as Mr. Pastor said, and there's not unanimity. Talk about the politics -- there's not unanimity within our political party about what you should do as far as nuclear energy. I do believe there is a consensus here that we do need a mixed and balanced portfolio, and I think there is consensus on the subcommittee.

You're not going to have it developed, though, if you don't deal with the waste issue. And you mentioned the proposed legislation and for sake of discussion, not argument, for sake of discussion today, let's set aside the comments made by a senator from Nevada earlier today or late yesterday that the legislation's not going to go anywhere.

When the secretary was here earlier, I expressed my concern that the way the Department of Energy would deal with the waste stream is to make it go away legislatively.

And I would read for the record, Section 9 of the secretary's proposed legislation that was delivered today: "Notwithstanding any other law in deciding whether to permit the construction or operation of a nuclear reactor or any other related facilities, the commission shall deem without further consideration that sufficient capacity will be available in a timely manner to dispose of the spent nuclear fuel and high-level radioactive waste resulting from the operation of the reactor in any related facilities."

We may have solved the problem legally, but it's like the Wizard of Oz: Let's ignore what's behind the green curtain. And you have this incredible physical problem of this waste, and a second legal problem of the liability that the people of this country as taxpayers now have. And, again, we all do want the same thing.

But I think for the department to -- I believe for the department to say, "Well, we'll just legislate this problem away and remove the pressure from the private sector and from everyone else who needs to deal with this," I think the second you let that pressure up, assuming this would pass, you would further defer into the infinite future the resolution of this and what the chairman's proposed.

Let's get going so there is some in fact, not just in law, confidence that we're going to be dealing with this and that we're going to be dealing with it this year and next year, not at some point in the distant future when we're all gone.

GARMAN: Lest you or the chairman or anyone in this room misconstrue or to think that we are pinning all of our hopes on waste confidence on this legislation, let me disabuse everyone of that notion. That legislation is a tool. Legislation is proposed. Legislation is not always passed -- agreed.

The ultimate issue of waste confidence is something for the Nuclear Regulatory Commission to decide. To assist them in understanding our seriousness to fulfill our obligations to deal with the waste program, we are -- and I know it's not a subject of this hearing specifically, but it is indirectly -- and I think you are seeing new focus and a new effort on the part of bringing Yucca Mountain to fruition with our budget request, our efforts to make it a simpler, more reliable system of waste management in the future.

I wouldn't want anyone to -- while, yes, we are committed to going down and recycling pathway, we still have the need for geologic repository, and we are moving ahead with Yucca. And that is fundamentally what the NRC will be looking at and evaluating: our seriousness in moving ahead with Yucca, in my judgment, and to decisions they'll make with respect to waste confidence.

So we are continuing with Yucca. There have been some people who believe that perhaps through our emphasis on GNEP, we are somehow deemphasizing Yucca, and we are not. Those are the elements, and there are a variety of ways that the NRC can satisfy themselves with respect to waste confidence.

Interim storage may be one, and we will work with you on that. Opening Yucca and getting that licensed is another. Recycling technologies is yet another. There's a place for all of those things to play.

HOBSON: But, Dave, here's the problem. Opening Yucca is fine, and we're all committed to that. But you've five-year flat-funded Yucca, and you've plussed up GNEP -- I don't know, $700 million or $800 million -- that's more than what you have for Yucca.

I'm committed to Yucca. The problem with Yucca is that when it opens, sir, it's full. And there is no plan that I have seen to build the other seven Yuccas that you need, and I don't want to build them right now, because I think this has been enough of a fiasco to get where we are.

I'm not going to be one to impose this kind of thing on another state. I think we need to go out and find people who want things, rather than dumping on them with this stuff. But we need to figure out a plan; we proposed a plan to stem this $500 million a year increase in liability from these communities.

And you've already paid some of that. Somebody needs to get real about the liability problems here, about how we're going to handle this stuff, and what kind of process we're going to have. And I want to get into that, because the next question is -- so we need...

GARMAN: Can I just say a word about what you just raised, because it is important? On the five-year flat-funding, yes, there is one scenario in the five-year plan we gave you that showed you the OMB-driven formulaic target of flat-funding. And we have another scenario that we provided you that shows you not a flat-fund, but what we think it takes to do the job.

So I agree that yes, future five-year flat-funding does not do the job, and I think in our five-year plan we make that clear. Secondly, you're right. We have 55,000 tons now; the repository is statutorily limited at 70,000 tons.

One of the provisions in the Yucca legislation is 120,000 tons. We have done a final environmental impact statement on the mountain that shows that it can take 120,000 tons. In fact, physically, it can take more.

But we've done the EIS based on 120,000 tons, so it's clear to us that mountain can take more waste, and part of the genius of recycling is even if we don't prove out the full UREX Plus process, we have means of pulling out the cesium, the strontium, and let that mountain take a lot more than it currently can.

HOBSON: Let me ask you one thing on interim storage. Right now we're asking sites to look at interim storage with the promise that they may in the future recycle, based on the technology that we're not sure we have yet. Correct?

Who's going to sign up for the interim storage, if it's just on a promise that we'll recycle one time, which appears that it might become permanent storage.

GARMAN: That's another one of the things that confronted us.

SPURGEON: We haven't gone out to do it that way at this point, sir. What went out was for the recycling demonstration, not the interim storage. We haven't gone out for an interim storage proposal.

(CROSSTALK)

GARMAN: We're at the hard place in the middle here.

HOBSON: All right, let me go on with this, because this is a big policy thing. To me, the one thing that the Senate and House agree on more than anything else is we need to build more nuclear power plants. I think it takes 20 to 30 to maintain our current percentage of nuclear for the future, and if we're going to shift it, we're probably going to need at least another 30. There are 103 today.

So we've got a tremendous expensive thing here that the longer we put off, the more we're going to be held hostage by the producers of fossil fuel, wherever they may be.

Frankly, this isn't my question, but I don't understand why this isn't one of the most strategic decisions to be made and why we haven't even more gone to the American public and said, "This is like when Sputnik happened; if we're going to have our quality of life continue, we have to have dependable, reasonably priced power to run this country. We have to conserve, no question. We have to find new technology."

But there is no question that right now there is no other massive power source out there that is clean in the atmosphere and we can control -- and I think we've done a great job of running these plants. Yes, there are little problems here and there, but so far it's all worked pretty well, except for one occasion, which was not the plant's fault, I don't think. But we've done a good job.

And why we're not taking advantage of this better -- here's something that concerns me. The committee's vision of recycling last summer was forced on the near-term implementation of UREX Plus, coupled with (inaudible) fuel fabrication. We believe that UREX Plus is a safe enough technology that we can move to competitive site selection and implementation in the next several years.

The department's GNEP proposal heads off in a significantly different direction. Namely, UREX Plus for the separation technology, but now coupled to fast reactors to destroy plutonium and other actonites much more thoroughly. That change in strategy may make sense, but the department has yet to make that case. Please explain the advantage of UREX Plus fast reactor strategy as a better long-term approach to recycling.

Why did you -- and you've only been here three weeks...

(CROSSTALK)

HOBSON: You've got a background in this stuff.

SPURGEON: Yes, that old saying: Been there, done that. Fast spectrum is better for destroying the actonites beyond plutonium. Plutonium will fission in a thermal spectrum just fine, but you get too much capture when you go into a thermal spectrum -- let me try not to get too technical here.

HOBSON: Yes. I'm a real estate guy.

(LAUGHTER)

SPURGEON: But let me just put it this way. You are able to better destroy the real bad actors that give the repository the problem long range in a fast spectrum than a thermal spectrum.

One of the things we're obviously trying to do here is get this waste storage monkey off our back, because we're all in the same boat of wanting to build more nuclear reactors, and we've got two monkeys. We've got the proliferation monkey, and we've got the waste monkey. And those are the two roadblocks that this, in a way, is really trying to address.

Can you do it without the fast reactor? In the beginning, yes, and you can maybe get a twofold or so increase.

HOBSON: Well, we're burning some right now.

SPURGEON: We're burning some right now. So which comes first? The recycle plant comes first.

That provides fuel downstream for the fast reactor that can more effectively burn in a closed cycle those beyond-plutonium actonites.

HOBSON: The problem is it's going to take longer. I think you need to have maybe a dual approach, because this is a problem that's now, but we're not going to be able to do a lot now except maybe license -- I don't know, four, six, eight -- some plants out there that are (inaudible). And people are going to put -- somebody told me it was $200 million or $400 million to license a plant.

If I'm running something, I'm not sure I want to put that kind of money into something unless I know what I'm going to be doing with it during the road. We've gotten one hitch out of it, but it's almost like we're running around chasing tails here, and we don't get anywhere.

What I'm trying to do, and what this committee wants to do, is while we have this secretary, who I have great confidence in, and while we have you guys, I'm not so sure yet -- but no, I'm just kidding.

(LAUGHTER)

Dave and I had a little discussion about some things.

I want to make a mark, because I want to move forward, and I don't want people to be able to move back later on, and this committee is united. I don't know that we've ever -- I wasn't on this committee before, but let me tell you, this committee's united in this goal. There is not one member on this committee that I know of that doesn't want to move forward.

And that, to me, is a big change. The House seems ready to move pretty much in a bipartisan fashion, but we keep getting locked up, and we've got to move on this. The longer we put off getting demonstration, the longer we keep throwing additional science in it when we know we've got a process that we think will work.

I'm not against the other part; I just don't want to wait forever. I don't think my grandchildren can afford us to wait, and this society can't afford to wait. It's going to be expensive, whatever we do.

If we didn't have a big (inaudible) at Hanford, we'd have a lot more money to spend on these things in the future. That's another worry as you look at the budgets out here. So we're trying to force action to keep moving, to get these plants licensed to move down the road, and I worry that what we've seen here -- and I worry that the legislation isn't going to advance the ball the way I'd like.

To me, it's like we're starting to move forward and then somebody is going to fumble the ball out there before we get it over the goal. And we know we have -- I would continue to press on Yucca Mountain, and I'm fine with that. But that can't be the only goal out there; there have got to be other goals.

Interim storage gives us that goal and it takes away from the arguments of those who are vehemently opposed to Yucca Mountain. It doesn't mean that we abandon it, but it sure helps us get moving on licensing these things, because I've talked to these guys at NRC, and I'm concerned that intellectually they can -- and properly -- can make the decisions that we think they should be.

And that's why I think that proposal at the end -- I know you had to produce something, but it doesn't make it.

SPURGEON: We will work with you, Mr. Chairman, on interim storage.

HOBSON: Well, I'm going to try. I'm going to tell you, I'm going to try to get some language. I don't know if I can get it done, but I'm going to talk to the authorizers about getting some language.

And I'm going to tell you exactly what I'd like to propose. I don't think it's any secret. I would propose allowing interim storage in any state who wants to take it, except Nevada.

I'm not going to force it. Now, there's something they had some years ago, this cold storage stance -- to heck with it. If they don't want it, we'll do it someplace else where they want it, and then we'll ship it in there at the time it goes in the repository.

And hopefully by then it won't be much by the time we get it in. You know, arrive today -- 97 percent after you use it once; is that about right?

SPURGEON: Once you're actually going in a repository, the bottom line is something like 3 percent of what you started off.

HOBSON: To me, that's 60-year-old thinking. And I know I'm old, but to me that's old thinking. Deep repository is old, antiquated thinking when we were so frightened of this stuff we didn't really understand what it is.

And today, the Navy moves this stuff around -- most of you didn't know this -- all over this country, and they put it on regular trains. There aren't people dying along the way, and there aren't people out demonstrating -- well, they probably will after I talk about it -- demonstrating against it.

(LAUGHTER)

It is handled safely; it hasn't fallen off; it can be done.

When we started talking about the trains moving some years ago when I first came to this committee, people in all these committees started getting up in arms. Heck, it's going through there already and they don't even know it, and it's safe. You can drop it off a 10- story building and it won't -- it's like Superman.

So I'm just frustrated because we can't continue to chase around in a circle. And one of the ways to eliminate the pressure from the Senate on some of this stuff is just say "Hey, we'll do the part that we have to do in Nevada, but we don't have to put perfectly good fuel rods down into there and take them back out some time later. Let's just recycle this stuff someplace, and that takes the pressure off."

So can we get on with this, Mr. Secretary, or are we going to just continue? And I don't know why we push at each other. I think it's a common goal. Senator Domenici's on board -- I'm not talking about the storage stuff, but he wants to get more plants, and I applaud him for that.

We want to do it. The speaker of the House wants it. So I got my orders, and we're moving.

I think it's pretty much a bipartisan feeling, and when you have that kind of atmosphere, it's the time to strike. You know, I used to work for a life insurance company, and they said procrastination is the highest price of life insurance. I think procrastination here may be the highest cost of my grandchildren's future well-being and yours.

Pete, do you have anything else? Go ahead. I'm done.

GARMAN: Thank you, Mr. Chairman.

VISCLOSKY: I would just echo the words of the chairman to start with. We're all in our positions to make the world a little bit better. And also I think all of us share a belief, no matter what the obstacles and problems we face, that if people of good will and some common sense put their minds and they're determined to solve the problem, they're going to be able to do it.

In my earlier comments on the proposed legislation, I was certainly very negative that one individual has indicated it is dead on arrival. In a sense, you do have kind of a suspender and belt approach, because you increase the capacity legislatively at Yucca and then also obviously in Section 9.

How does the administration -- what's the feeling and what's the approach? What's the level of optimism that they will be (inaudible) legislative initiative?

GARMAN: I prefer not to speculate about the factors outside our control. We have made a start, and we have a start, and we are just committed to work with this committee and other committees of jurisdiction and interest to see how far we can push it.

VISCLOSKY: And, Mr. Spurgeon, you had mentioned that there are the two issues of proliferation. And, again, I do think we are in agreement, but I share the chairman's urgency that we can't just think about the longer-term future and that Yucca will be open some day.

And I do remember, and the chairman's very reticent about it, several years ago when there was a separate legislative proposal that was going to take care of the financing, and Chairman Hobson spent the better part of a year of his life finding about -- what was it? -- another half-billion dollars, thereabouts, to put it back in because he was adamantly, and is today, committed to Yucca.

He pulled the administration (inaudible) that year at great time and effort. And so there shouldn't also be any misunderstanding publicly that there is that commitment for permanent disposal. But in the meantime, as he proposed, we've got to do something tomorrow. And I don't think we can -- and I hope you're successful in some fashion with the legislation -- just wishing this away.

I do hope people maintain a sense of (OFF-MIKE).

If I could, Mr. Chairman, a couple of questions, and then we have obviously a whole series (inaudible) that we're all here. The NRC informs us the department has not yet involved them in any discussions on GNEP or the future regulatory scheme for GNEP. When will they be involved in this?

I do think that's very important.

GARMAN: It is very important, and we have in fact briefed individual members of the commission on GNEP concepts. Part of the notion of building an engineering-scale design is to involve NRC so that they can design a regulatory process that makes sense in the future, and they will be involved.

So I guess the short answer is we have briefed members of the commission individually in a couple of cases, and we will continue to work with NRC because it is very important that they be partners in this effort.

(CROSSTALK)

VISCLOSKY: The secretary talked about UREX Plus waste could be easier to manage. Will the engineering-scale demonstration activity proposed as part of GNEP include the processing of all waste produced to put them in a form ready for permanent disposal?

GARMAN: The short answer is yes. Part of our design criteria is to deal with all the waste streams and to not have liquid waste, and beyond that that's probably as far as I ought to go, and turn to Dennis who actually has the...

SPURGEON: If you're talking about what UREX process is, the answer is yes, all of those waste streams will be dealt with and you will have no liquid waste coming out the other end. I almost thought the question, though -- there are various kinds of reactors that some have operated in the past. We're talking about UREX, really focusing on the reactors that are in use in the United States today, not perhaps some of the research reactors and whatever that were from times past.

GARMAN: If you don't want to repeat the mistakes of the past, where reprocessing created new waste streams that we didn't think...

(CROSSTALK)

GARMAN: Yes, that's right. We made an interesting soup from a variety of different processes over a variety of different years, which made the characterization of that, and dealing with it is much more complicated than it was at Idaho or Savannah River.

VISCLOSKY: On GNEP and the UREX Plus process, has DOE subjected its recommended approach to external peer review?

GARMAN: Not formal peer review. We have had what we call red team reviews, where we have people come in and criticize and challenge, and this is informal, which is good. It's a good process, candidly, and we spent several Saturday mornings listening to some of our red teams tell us their concerns: technical, programmatic and policy, about these approaches, and we took those into account.

VISCLOSKY: Chairman, one more if I could, and then I'll desist.

In fiscal year 2003, the subcommittee directed the department to prepare an annual report to Congress assessing the lifecycle cost, waste streams and energy requirements and other factors comparing different recycling and transmutation technologies.

The last report was in May of 2005. A report of this nature, I believe, should present the kind of quantitative information that would allow us to evaluate the trust costs and benefits of GNEP; information such as lifecycle, energy inputs and waste streams.

When will the department submit a comparison report for the Advanced Fuel Cycle Initiative that includes quantitative information?

GARMAN: I know that we're planning to produce a report based on that requirement in May of this year. Whether or not it will have the detailed quantitative information -- GNEP being relatively new, I'm not certain of that, and I need to get back with you on that.

SPURGEON: I'd rather get back with you with an answer rather than...

(CROSSTALK)

GARMAN: We probably want to have an understanding. We, on the one hand, don't want to delay a report, and on the other we want it to be as complete and useful as possible, and figure out with you and your staff where to split that...

VISCLOSKY: If you could, because my anticipation, Mr. Chairman, is that will be on the floor in May, the current schedule being what it is. So time is of the essence, but obviously the quality of the information is very important. So if we could just continue (inaudible) that'd be terrific.

(CROSSTALK)

Gentlemen, thank you.

Thank you, Mr. Chairman.

HOBSON: This has gone longer than I anticipated. But I think you can see the level of interest.

We had almost every member here today; they stayed; for the most part, they listened; they had different perspectives.

One of the other things you should also take out of here is that we have formed some teams on this committee, and if you haven't heard about them, hopefully some of them will be visiting you. What has concerned me over the years, when you're on a committee, you tend to only be interested in your parochial interests. For example, some members' water is life bread in their particular district.

But I also want them to understand the nuclear area that we have, the weapons area that we have, and the DOE labs, generally. So what we have is everybody can pick their favorite to be on a team. So everybody can be on a water team, everybody can be on a lab team, but they've got to flip and take another one so that they begin to learn some other parts of this committee.

This is going to make it more interesting for some of you in the future when you come here, because they'll be asking different questions than you might really think about. But it will make them better members and more knowledgeable about the bill as a whole.

So I hope you'll take that opportunity. I think it was DOE that Ms. Emerson said -- I think it was DOE or the weapons guys, one of them. Somebody came in and met with one of the teams, and they were absolutely elated with the knowledge that was imparted to the members; they really felt that they had learned something.

So it just goes on. We're going to try to encourage this as long as I'm chairman of this committee. We're going to try to continue that. And that was a directive from Jerry Lewis, my chairman, that we do more oversight.

And I thought this was a better way to do oversight than just the ranking member, myself, doing it; to get the members involved. So you may see some of them around and I hope you'll be responsive to them when they come.

I really appreciated our meeting yesterday. We didn't pick on you today, but he's got some business perspective and he's got some good ideas.

Have I met you before? When you had one of your other jobs?

SPURGEON: Maybe a long time ago. Not that I can remember.

HOBSON: Well, I was looking at your resume, and you worked for a company that I had some dealings with in this committee, but I don't know if you were there then, so I'll talk to you about it after.

SPURGEON: I hope it's good dealings.

(LAUGHTER)

(UNKNOWN): You'd always remember meeting the chairman.

(LAUGHTER)

HOBSON: We appreciate your indulgence. These are good learning experiences for all the members, and we appreciate your time. This meeting is adjourned.

SPURGEON: Thank you.

GARMAN: Thank you.


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